I have seen both and although I am a bit puzzled as to why there is a Mermaid skeleton, it's been there for quite a while now. At least a couple of years I think. I only ride it once a trip and I know I have seen it at least twice, maybe three times. I have seen the Mermaid projection just once and frankly I thought it was pretty well done. It is distorted, but, if you were looking at something that is underwater and you are not, it would be distorted. So it was done well, in my opinion, but, apparently there are technical issues or maybe not enough people even noticed it to make the effect worthwhile.
To those about to say... Well, it should be working, Walt would roll in his grave, etc., remember that an effect that isn't seen is worthless. This one seemed to be way to subtle for the non-Disney obsessed to either see or even know existed. Without knowing where to look, it is nearly impossible to just accidentally notice it.