I've never heard of river sources overflowing. Didn't even realize it was possible. Are they just failing to stop filling, or is the water somehow flowing downhill? If your site's got an aquifer, you could try draining the overflow into that.
Ever since my last coastal embark, I've been curious to see if I could use waves and floor grates to create an easy mass mist generator, so I don't think I could resist another ocean embark, despite the reclaim issues.
On an unrelated note, in my current fortress I found out that the Red Sand tiles created by the tree collapse aren't located on a constructed floor but on top of the tree itself!. It seems that even though the game allowed me to designate constructions in the same space as tree branches, those constructions cannot actually be built. But by attempting to build floors between the trunk and upper branches of a tree, it looks like I caused the upper branches to collapse, creating a cloud of red sand. Normally this sand would act as a contaminant rather than creating a soil layer, but for some reason it works on the top of a tree.
There was recently another collapse at the sandy tree tiles. I suspect that the game is trying to make the tree grow, but either the sand layer on top or the surrounding floors interfere with it, causing them to collapse again. Fortunately, it didn't damage anything. I'll have to test and see if this is reproducible. SCIENCE!!
Edit: Can confirm, totally reproducible! With the correct application of dwarven SCIENCE!!, sand really does grow on trees!