Your Majesty, your "Good telescope sinking ship" theory is bollocks. If the reason the ship appears to sink is a wave near to you blocking it, then it doesn't matter like shit whether you are using the naked eye or a telescope powerful enough to resovle a single moth on the surface of pluto. Want to know why? Because the telescope works in the same way as the eye, it only effects the light rays once they enter it. Using a telescope does not change your perspective, it just magnifies the image you see. So, if the reason the ship is sinking is due to a wave between the ship's hull and your eye, using a telescope will only give you a magnified view of guess what; a ship with it's hull blocked by a wave, so it still seems to be dipping below the waves.
The only telescope that would give you the desired effect would be one that is long enough to collect light from a point beyond the wave, or one that magically bends light as it is en route to the telescope and before it enters it.
Even if you have such a telescope, if the FE "Sinking ship" theory is true then as you saw the ship sink, with your magic telescope you would see water behind it. This is not what you see, because the water's surface bends away from you with the curvature of the earths surface, and the ship follows this curvature and appears to sink.
Also, if indeed you live on the coast Your Majesty, do you not see a definite line where the ocean meets the sky? In FE theory, if things in the distance fade away because of the dirty air then wouldn't the ocean slowly fade into the sky? I believe it would.