Tested WorldGuard code - works.

I created a protected region, and ran several thousand
erosion cycles over gravel under water inside, and outside
the worldguard region. Only the area outside the worldguard
was modified. Also tested everything works without WG
installed, and adjusted the README.
Also deposit into lava

This makes the plugin consider lava equivalent to water and
blocks will fall -into- lava pools and streams, just like
they can fall into water.