On my cousin's former Lancer, the air cleaner is also at the top of the engine. But the point where it draws air is behind one of the headlamps.

In theory you can ford water as long as the electrics don't short out or water doesn't get through the air intake (air filter).

Water mixing in the oil is bad. But it will rarely cause you to stall. You can have the oil changed afterwards.

Water doesn't really enter the muffler. There is usually suffiient back pressure to keep water out.