This.
I have seen a diorama that someone built whereas the model was not waterlined but placed in a frame, the model nested within a plexiglass/acrylic "sea" where one could view the hull above and below the waterline from a sideview vantage point. I think the model was situated in a green/blue plexiglass/perspex "sea" and with light above, one could see the hull (illuminated by tinted green light) below. Looked splendid. I've also seen displays like
Oci has mentioned (the best of both worlds) but I guess the decision lies in the builder. To each his own...
Waterlining the hull might probably be the best decision as it is much more "toylike" down there.
It should be possible to make a waterline display of a complete hull. Need a fairly deep base and and for some hull profiles like this one a bit of ingenuity. In fact lots of possibilities, but I'm sure they've all been done before.
I might even try that on my own r/c boat.