It doesn't matter where the horizon line is. The sinking ship "phenomenon" can ONLY be explained by a round earth.
Whether this flat earth is finite or not, you could always see the ship. It would NOT "sink." It would only seem to shrink to the naked eye. Pull out your telescope though, and you can still see it.
If there is one inch in height discrepancy, it will block out all object beyond it.
This is absolutely incorrect. If said ship is 10 feet tall, this 1 inch wave will NOT block it from your veiw or block a laser shone on it.
Let's say the earth is flat. We shine a laser from 8 feet above sea level parallel to the earth at a 10 foot tall boat. If the earth is indeed flat, it will continue to shine on forever until it hits the 10 foot tall boat, no matter how far away it is. To the naked eye, it does indeed seem that both the ship and the laser beam dissapear below or converge into the horizon. But go find your telescope again, and low and behold, there's the ship with a laser dot on it 8 feet up!
Perspective is just that: how you perceive something; in this case, how you see it. It doesn't necessarily mean that's what is actually going on.
look at this picture.
Do you really think that pencil has a huge point and then tapers off towards the eraser? Because that's the same effect you see when the ship gets far away on a flat earth. It looks like it's shrinking the farther away it is, but even when it's 5,000 miles away from you, the boat is still 10 feet tall. Nothing shorter than 10 feet tall can ever block the laser beam.