This is a problem in ALL versions of Minecraft (to my knowledge); including the latest snapshot.

When a leaf block is placed underwater - the top renders correctly - but the other sides will always show a "falling water" animation - meaning leaf blocks cannot be used underwater (they currently appear glitchy and therefore very unappealing).

With 1.8 there is an increased importance on underwater structures/building - and it would be a WONDERFUL improvement to be able to place underwater vegetation with normal leaf blocks (to replicate kelp or sea grass).

Stairs are understandably difficult in terms of how to be rendered underwater - but leaves are a full block - if the falling water animation (sides) was removed - leaf blocks could make underwater building much more interesting!

Note* While stairs and doors are understandably problematic - glass and leaves are (visually) full blocks and should not have this problem - a fix for both these blocks would add a great deal to the game.