Yeah basically this. Last time I checked, Luffy's CoO allowed him to sense rocks being thrown at him by Rayleigh and drops of water from Hody, which have zero life force. The only comment Sanji made about difficulty was the fact that the water was dark, which is what made him use Observation Haki to find Kinemon in the first place, and maybe about Nami's body not being as good a swimmer as he is in his own(not sure on the latter).
Observation Haki is kind of an inconsistent joke at this point in the story.