This is a post similar to the Wave Crests And Sunsets thread. The point is that the waves and vanishing point explanation is cr*p. I'm serious. The vanishing point has nothing to do with this phenomenon. As long as Tom (my subject) is above the height of the waves (and I believe Tom + the shore will be above 44 inches or whatever), then Tom will be able to see the entirety of the ship above those waves. Here's a picture of what and FE sinking ship would look like:

Now on a round Earth the sinking ship phenomenon is causing by the curve of the Earth and is much more easily explained. As the ship travels, the Earth gets in the way. Further evidence for this is the ship simply gets smaller and sinks. On an FE, we should be able to see the patch of water that the ship would "disappear" on, or get so small as to not see it. But on an RE, we see only the patch of water that gets in our way, in this picture, where Tom's field of vision touches the horizon.

In conclusion, the waves are not going to obscure the ship. It's silly and wishful thinking on the FEer's part.