Currently virtualized units will transport across water without issue. So there's no reason why starting them on one island and making their way to another wouldn't work. However, if you get close enough for these units to get un-virtualized, I'm fairly certain the infantry soldiers would literally be swimming. I know the ALiVE Devs are exploring options for genuine amphibious transportation, but right now it doesn't work that way.

Note: I have no clue what would happen if you un-virtualized a motorized unit or armored unit when they were in the water making their way to shore. My best guess is it wouldn't be pretty! :)

What I would try is setting up my unit spawns on one island. The other island where the battle would be would have high priority objectives. What I'd then do for any unit(s) I thought I would get close enough to un-virtualize, I would manually place some boats with units already inside them, and make sure to allow them to get virtualized by the Virtual AI module. The Military Commander in my experience will send them on objectives like any other vehicle, though keep in mind I've only ever done this with the intention that these units would stay in their boats and I have not tried to then have them dismount on foot and attack the shore.

If your intention is to have a relatively short battle, so battle casualty replacements wouldn't really be necessary, I'd manually place all of my BLUFOR units that way it would at least *look* pretty awesome as you all made your way to the other island. Again, I haven't tried to see what happens when these boats hit the shoreline and whether or not they'd disembark and make their way to the objective but I have a feeling they would.

I should try it. That kind of mission sounds pretty sweet actually. :)

Units will never be swimming, they will move to the nearest land.

Amphibious landings aren't currently possible because it requires a path finding function which we don't currently have and because A3 lacks water assets.

A littoral addons to ALIVE making use of 3rd party assets is a desired future feature, but right now it's just, a desire.

Oh ok. Good to know. Thanks for clarifying that.

Do you know offhand if AI units manually placed in boats and virtualized will disembark when they reach shore and continue on foot to the OPCOM objective?

No they won't. They will not disembark automatically if they cant reach the ibjective on foot and AI aren't very good at reaching the shore without getting stuck either.