I'm assuming that you are referring to the Tunze Wavebox, which produces actual wave-like motion in the tank.
1. That is adjustable and would depend upon how high a wave you want. It is also somewhat dependent upon how long your tank is. The longer the tank, the higher the waves. I would personally go with the water line at least 3-4" below the top just to avoid any possible spillage. Of course, you can get a feel for this once you have it.
2. The constant back and forth motion of the tank water will put extra stress on the tank and stand. I don't think this would be a real issue in a well-made tank or stand. Personally, if I had a big tank I would be very paranoid about such issues. However, when I do get a big tank I'm definitely going to spend the money for a good one. For some of the cheaper types (like AGA for instance), it might be something to consider.
The reason why you might not see more tanks using a Wavebox is probably for the following reasons:
-It costs $500
-It provides a cool effect, but one might wonder if it actually provides much of a beneficial effect.
-It really only works with longer tanks. Some might even doubt if it is worth it on a 4' tank.
-It isn't exactly small or pretty. Unless there is a good place to hide it, it would stick out like a sore thumb in most tanks.
-And finally, it costs $500. I know I already listed that one, but I think most of us are constantly saving our money towards something on our wish list that we feel would improve our tanks greatly. If I had an extra $500 lying around to spend on my tank, I would probably buy a better skimmer, or an ACIII, or perhaps some really nice livestock. Point is that not so many people find it worth spending all that money.
On the question of alternatives, aside from some DIY attempts (somewhat successful, but not quite as good as the real thing) there has not really been an alternative to the Wavebox until recently. Now there are two other things that can perform similar feats. One is the new Aquasurf expansion for the ACJr and ACIII. It allows control over variable speed Tunzes at a fast enough rate to create pressure waves and thereby recreate the effects of a Wavebox. The other is the new wireless controller for the Vortech, which can basically do the same thing. Now that these options are available, I personally think that the Wavebox is sorta obsolete. These controllers eliminate the need for a big ugly box and also allow for many more possibilities in terms of circulation and wavemaking.
