There was some stone laying on the ground from a rock that was destroyed. I placed a blueprint over it that used this mod, and the ghosts that were overlapping the items on the ground would refuse to build. The ghost remained as the ghost on water variant and never transformed into the regular variant until I picked up the items off the ground. I would expect the mod to see that items are blocking the ghost and automatically generate requests to pick up those items.

That's a known issue, I don't think it's worth fixing tough, since the only way to fix that would be to scan the area under the water ghosts every single time they get updated which could potentially have a significant performance impact since searching for entitles is pretty slow, I haven't tried it so I'm not sure if the impact is really that high but it's pretty trivially to just sweep areas with a deconstruction planer for items on the ground or use a mod that automatically marks all items on the ground for deconstruction (nanobots for example as a thing you can connect use to set your whole logistics network to collect items on the ground). I probably won't fix this it's just insn't worth the potential perfomance impact and/or work it would take to implement.