The bug:

If a processor list that changes blocks generating on water is used in a template pool with the "terrain_matching" projection, the processor list will only work if the jigsaw block is not on the same layer as the blocks that are changing. It works if it's generated with the start pool of a structure, but not if it's generated from a template pool from jigsaw blocks.

If the projection is "rigid" the processor list works even if the jigsaw block is on the same layer as the other blocks for every structure.

In the embedded datapack, stone blocks will turn into oak planks if it generates on water and cobblestone will turn into mangrove planks. What block a jigsaw block turns into doesn't matter.

How to reproduce:

• With the embedded datapack enabled in a world, type: 

  /place structure test:test_structure_terrain_matching

  when over a body of water.

• If the jigsaw blocks are on the same layer as the other blocks, the processor list will only work on the structure generated from the start pool.
• If the jigsaw blocks are not on the same layer as the other blocks, the processor list will also work for structures generated from jigsaw template pools
• If you type: 

  /place structure test:test_structure_rigid

  when over a body of water it doesn't matter where the jigsaw blocks are placed, the processor list will work for the jigsaw template pools.