I've camped a few times at Living Forest and depending on the site the privacy isn't too bad. Back side, away from the water, is the most sheltered with lots of shade and probably better for tenting. Waterfront sites are set up for large units with full service. But they really aren't water front. You're sitting probably 50-60' above with a decent overview, but you need to walk down a dirt road to where the estuary is.
As for dive shops, I frequent Nanaimo Dive Outfitters and Sink or Swim Scuba. I've found both are run by decent folks, both offer Nitrox (if you do that) and are quite knowledgable for local dive site. So far for me, the better shore dives are actually north of Nanaimo up in Nanoose Bay and area. For me the not to be missed sites are The Big V in Nanoose Bay and Tyee Cove just a few K's south of there.
If you want to come up to my neck of the woods (45 min -1 hour from Nanaimo) in Port Alberni, we have a sunken immigrant ship that's pretty cool if the viz is good and a nice wall dive just a few 100 yards from it out in China Creek.
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