If it was to be in a park, world showcase lagoon would be the best place. Other than that would be smaller versions in the lake at the studios or DAK.
You also have to take into consideration, World of Color uses California Scream and the Mickey Wheel in parts of the show. There really isn't anything in WDW that could serve as a "backdrop." May be use the countries in Epcot or Everest at DAK. DAK doesn't have much viewing space for a water show on the lake area.
If it was done outside of a park, there are many lakes on property. There is a challenge with the many boats and also not having a solid foundation for the fountains and lights. Could use, 7 Seas Lagoon, Bay Lake, Crescent Lake, DTD. I can't really see WDW doing a free show. Also, many viewing challenges for guests as well.
Personally, I think Epcot would be the best choice. A lot could be done with fiber optics, LEDs and projections on the countries.