> when a water wave gets pushed through two slits, it breaks into two separate water waves, one coming from each slit, and those two waves push the water up and down at the same time at different locations.
What physically observable distinction are you drawing? The points of water on the far sides of the slits will have a certain height at each point at each time, forming the interference pattern you'd expect. You can decompose that function into a sum of two separate waves, if you want, but you don't have to. And exactly the same thing is true of the quantum mechanical wavefunction for a particle passing through a pair of slits.
> A wavefunction amplitude does not represent a displacement in any kind of medium. They represent a measure of the probability that the system being described is in a particular state at a moment in time. That state need not even be a position, it might be a charge, or a spin, or a speed, or any combination of these. Basically quantum systems oscillate between their possible states, they don't oscillate in space-time like matter affected by a wave does.
I don't think that's a real distinction. Water height is a different dimension from (x,y) position and it behaves very differently; that the wave is moving across the surface and that the surface is moving up and down are orthogonal facts, the reason the former is movement isn't that the latter is movement. A classical electromagnetic wave moves even though it isn't in a medium that's moving (and so does e.g. a fir wave).
> You can decompose the system's wavefunction as a sum of multiple wavefunctions corresponding to certain measurables, but this is an arbitrary choice: any such decomposition is exactly as valid. In matter waves, if I drop two stones in water at different locations, the water surface's movements can be described as a single wave, but there is a natural decomposition into two interfering waves each caused by one of the stones. There is no similar natural decomposition that quantum mechanics would suggest for a similar quantum mechanical system.
Again I don't think this is a real distinction. You have exactly that natural decomposition in the QM system - it's not the only valid decomposition, but it is a valid one and it has some properties that make it nice to work with. And similarly for dropping stones in the water, infinitely many other decompositions are possible and equally valid (e.g. decomposing as two copies of a wave where you dropped two half-sized stones into the water).