I've encountered a blip in my engineering idea.
Say our boat is a cube-esque block length 1m, width 1m, height 1.1m.
It weighs 1T, and so will float with .1m out of the water.
As a control, we float it in a calm pool and mark off where the waterline is, approximately .1m from the top.
And to prove it is indeed floating (this will become important later), we drop a 10kg cinder block on top. This causes the boat to sink into the pool by an additional 1cm, i.e. it is now floating a mere 9cm out of the water, our mark has sunk 1cm below the waterline. (The water level in the pool does not rise noticeably with the addition of 10kg.)
Agreed so far?
Now we want to demonstrate the exact same thing in our boat-hugging container. The container is 1.004m on a side, leaving a 2mm gap all around. It is as tall as we need it to be.
We drop the boat in and it floats to the exact same mark as above. So far so good.
Now for the pièce de resistance, we must prove that the boat is indeed floating above the bottom of the container (that it will rise and sink freely with only a change in weight).
We drop the 10kg cinder block on top and the boat sinks into the water by 1cm, just as before.
But wait - the water level in the container does not rise a mere 1cm, as before, it rockets out of the gap and climbs much higher because the 10L of water that the boat is now displacing must squeeze into the 2mm gap all around. It get a ridiculous figure when I try to calculate how high the water level in the tank must rise in the tank to accommodate 10L of water in a 2mm gap.
10L of water, distributed in a 4m x 2mm area works out to a ridiculous height of 125cm. That is obviously stupid because it means a 10kg addition makes the boat-and-water-level rise up in the container by 1.25m.
Where is the flaw in my logic?