The muck will break down somewhat, since air can get to it. But it won't be a big difference. I also think that if you dig a spot deeper for swimming, the muck will tend to slide into and fill up that deeper spot in no time once there is water in it again.

Yes, the lilies will come back. I dried mine up for three years and those left came back.

Can you put additional time and money into it besides the help your getting?