I wanted to create a water reflection for my game and used the Paster plugin and it worked well, however then I added effects to the objects that I was reflecting and found out that Paster did not work with objects with effects. So, I started looking at trying to make an effect that does a reflection of the 'background' across the Y axis as I needed in my game. Here is my first result which will hopefully work for me and may work for others.
If you don't need to use effects on objects, you may also want to check out Paster instead.
In this implementation, you must update the OffsetY parameter of the effect, depending on the location of the sprite using the effect. See the *.c3p for an example. In this example I set the origin of the sprite to the top, so the reflection starts at the top of the sprite. I imagine rendering order / layers / z-order matters for this effect, but I have not tested many variations (the example has only two layers.)
The example is also using the Skend effect to show that it works with an effect. You can grab the C3 Skend effect here: Skend C3 Thread.
Project: ReflectYSkendTest.c3p - also requires Skend effect.
[Edit] Updated project file to handle zooming viewport.
Example with moving sprite reflection: