BigMac :

When put in that way lime will dissolve a little but mostly sink. The part that dissolves will mix in the water with wind/waves. It is good to put some in at the point where water comes into the pond. It will wash to deeper water some what. It is good to cover as much of the bottom as you can but not critical if you can get it to multiple locations. What we do is have most of it spread and have a little dumped. The dumped part is put out by boat with plywood as you noted above over time.