You may want to try using -dxlevel 81 instead of -dxlevel 70. I know HL2 USED to support 7.0 at the lowest, but I generally found it to run even WORSE than just using 8.1, and I don’t think Episode 1 or 2 ever supported 7.0. Since HL2 now runs on an updated engine comparable to episode 2, you’ll want to use that as your standard, so 8.1 is probably going to want to be your minimum for that.
You may also want to try turning vsync off and typing “fps_max” into the console, and then set it to roughly 60-75FPS or whatever your monitor’s native refresh rate is. The human eye CAN perceive motion as being smooth with as little as 30-60 FPS, the issue is when there are large fluctuations (such as having 120fps at one point, but then dropping down to 60) which are typically what I see affecting perceived performance.
Since fps_max doesn’t work the same way as vsync, I don’t think it impacts performance as much, but provided your minimum framerate doesn’t dip too far below what fps_max is set to, then you shouldn’t notice the framerate varying as much.
For more details, you may want to try looking here for more ways to benefit your FPS, but you may want to work on setting your graphics so that you get the best visuals you can while still staying above 60FPS. HL2 isn’t a multiplayer game, so there’s really not as much need for the uberhigh framerate in order to compete with other players, especially if it might be going even higher than what your monitor can support (I’m going to assume that your monitor is better than mine, but I still thought 120hz was about the max most monitors were bothering with just yet. Maybe you have higher, but that still seems a tad excessive)
For further optimization ideas, you may want to try TweakGuides, which gives a pretty decent look into what all the various options do, and which ones are going to affect your performance the most and in which situations. Since your problems are apparently in water hazard, and near eli’s lab, you may want to turn down shadow detail to low, and water detail to simple reflections.