Spoiler:I have a theory that she might have eaten a fruit that has her grow or shrink. Some have other theorys, that cuz people who eat fruit on land can't swim, if mermaids were to eat fruit in water they might not be able to go on land. Course guy in charge could think of any thing he wanted and make it happen if he wants her to join. I do agree, the princess was much better this chapter and again really liking her and Luffys interactions, always the best.
Spoiler:
I doubt that, because we saw that Vander Decken IX has to wear a Flutter Kick Coating because he could lose his power and ability to swim if his body was exposed to seawater.
I wouldn't be surprised if they decided to make a movie of what happened during theSpoiler:time-skip
Spoiler:
I think that would make a better canonical filler for the anime, than a movie.