Rainman I sort of agree with you my next step will be to escavate behind a dam and hammer through the rock to get below the gravel and repack with Clay and some polymer mixed in
I believe you're correct this needs to be done above the waterline of the pond
orgeranyc, you do not always need to bust the rock and dig out the gravel under it. By "chasing" the gravel, (and assuming you have good clay on site) I meant to follow the gravel upstream till it is out of the pool area (above and below the dam) and cover that area with a minimum one foot thick blanket of clay tied into the soils above and below the rock/gravel shelf.
