I believe Ford is once again bending the truth here.
There was indeed a different and infinitely more ambitious Little Mermaid ride pitched by Tony Baxter and his team. But it's a very old concept from the early 90's, it was planned to be built at Disneyland Paris. It was shelved, I assume due to financial issues with Disneyland Paris as well as major executive changes within the Disney company. Tony Baxter was also effectively put on the bench at Imagineering around this time, restricted from working on most projects and limiting his influence.
Yeah it was on the bonus features.
The pitch of the ride was released publicly, I believe it was included as a bonus on one of the Little Mermaid DVD releases. Early primitive CGI, but you can get a basic idea of what it was supposed to be-
While I absolutely would have preferred his version of the ride, i've not seen any evidence that it was ever intended for DCA 2.0, or that Orlando leadership had any real influence on any cuts the ride had during development. It really doesn't even fit the narrative that Orlando balked at the cost considering the expense of the much more elaborate queue MK got compared to DCA. I doubt Tony Baxter's pitch was ever seriously considered to be built in the modern era.
Plans for Epcot's Project Gemini during the early-mid 90s also show an overhead map of the Living Seas Pavilion labeled as having a Little Mermaid attraction inside (no actual art, just a blueprint of the park). Obviously never happened (Project Gemini was never fully realized thankfully), but that's the only other Mermaid concept i've heard of.
And there's this early concept art (don't know who got a hold of this or how) of a somewhat different exterior for the Little Mermaid ride at Magic Kingdom-
http://4.bp.blogspot.com/-X02JzgA81NE/TqGSN9xtjuI/AAAAAAAAAA0/ClNU7I3QSyg/s1600/WDWLM1.jpg