I had a chance to sit in front of CS6 for a moment. In Effects, search for "Garbage Mattes" and you will find 4, 8, and 16-point versions. Apply one of these to the top clip, and in Effects window, just to the left of the effect name, there is a little icon that is a square with four smaller squares on the corners - select it, and you will then see the marking points in the Program Monitor for the Matte corner points. Just drag them around to create the rough shape of the mask to isolate part of your image, with the background clip underneath showing through then outside the matte area.
So maybe apply reverse to lower waterfall clip on V1, and then put waterfall clip with kids on V2, with Matte applied, and just select the area where the kids are and that is the normal clip, while the background waterfall is reversed.
Have fun
Jeff Pulera
Safe Harbor Computers