That's already a massive amount of chakra, and the key point is that the volume of water wouldn't have changed in the slightest, they'd simply have taken a lake's worth of water and elevated it.
They'd still face all the aforementioned problems, and more. The Hōzuki are just as capable of using the other natures as normal shinobi, they simply have a greater affinity for Water release. The amount of chakra they'd need to spend to not only create their trap but keep it running would be massive and a constant tax on their chakra levels. The minute they slip the Hōzuki are going to earth release their way out of that trap and the leaf would've expended much effort and gotten little in return.
The Mist village is the single hardest village to besiege not because of their sheer power but because of the versatility of the jutsu available to them, I'm not gonna say anything since I don't want to give you any ideas. But let's just say they'll run out of chakra before they're even half done with what they're attempting to do.
Given that the Hōzuki don't antagonize the Land of Fire, they would very happily ignore them because expelling them simply wouldn't be worth the price they'd need to pay.
The Leaf would be the aggressors in this case.
As you can see, Konohagakure is located very far inland, and to trudge all the way over to the ocean to pick a fight with a clan that hasn't been antagonizing them (because...why would they?) really wouldn't give them any high ground to argue from. It would've been a war the Leaf would've started.
The Leaf is so far inland that performing the exact same thing they plan to help Jin with in the harbor by casting genjutsu, would be
FAR FAR easier to do by simply having a genjutsu Mist lingering around wherever they decide to settle. Being in the middle of the Ocean and close to the Land of water, renown for its Mists, the Mists would be perfectly normal and no one would find it strange.
Since their Genjutsu would be incorporated into the very terrain itself, and the only people frequenting the middle of the ocean would generally be normal fishermen, the genjutsu would easily conceal their presence. Any Ninja passing through would have to go out of their way to be
looking for the Hōzuki clan to have any real chance of interaction with them.
Unless the Hōzuki for some reason start initiating interaction with foreign Ninja or slaughtering civilians the Leaf would be kept in the dark the entire time. Furthermore, any ninja passing through the water in the direction of the Mist village is either an enemy on a mission to the Mist for nefarious purposes, in which case them dying would be literally no issue at all. Or diplomats, and the Hōzuki could easily play the role of 'Welcoming the Guests.'