A couple of friends have indicated that they're a little hesitant to vote for “Wakulla Springs” for a Hugo, on the grounds that they don't feel that it's really sf. I wrote a version of the following as a comment in a friend's LJ post, but thought it was worth expanding and posting on its own.
There are inevitably some spoilers here, though I don't think I'm giving away much of the plot per se.
For me, “Wakulla Springs” fits pretty easily into the tradition of stories that have what Ellen Datlow has called “speculative sensibilities”—stories that are about topics of interest to sf readers, stories that approach things from a sort of sfnal perspective, stories that are by sf authors and published by sf publishers (because sf is a marketing category as well as a genre per se); but stories that nonetheless contain few if any clear overt speculative elements.
The first such story I was really aware of was also by Andy Duncan: the brilliant “The Chief Designer,” which by many people's standards would be considered historical fiction about the Soviet space program. I was really hesitant to vote for it when it appeared on the Hugo ballot, but in the end I did, because it was my favorite story on the ballot (possibly my favorite story of the year). There's material near the end that some have argued justifies calling the story fantasy, but I would say that the whole story can be read as nonfantastical. Regardless, I suspect the reason it was published in Asimov's was that it felt relevant to science fiction. Something similar was true of Ellen Klages's “The Green Glass Sea,” which is historical fiction about the Manhattan Project, but which felt to us relevant enough to science fiction that we published it at SH. (And Ellen later expanded it into an excellent middle-grade novel, which is also not overtly fantastical.)
So Klages and Duncan both have a history of writing historical fiction and selling it to sf venues. (They're not the only authors who've done that, of course.) Their abovementioned previous such stories were specifically focused on the history of high-profile technology in the mid-20th-century, which I guess seems to me to be especially relevant to science fiction readers; but I think that focusing on the mid-20th-century US history of (for example) monster movies, cryptozoology, and racism can also be relevant to genre readers. So I feel like “Wakulla Springs” is more or less in a similar category to some of their earlier work.
It could also be argued that “Wakulla Springs” is a sort of North American magic realism (as suggested by a commenter in the comments on the story). It ties together cryptozoology and movie monsters, tall tales and superstititions; it features an interview with a chimpanzee; there are half-glimpses throughout of various cryptids and monsters (such as the Skunk Ape), culminating in the overt final paragraphs; there are a couple of characters who can swim so well that people say they're part fish, and a character who wears a costume that makes him look part fish (not to mention the frogmen!). So it could be argued that there are threads of fantasticality deeply embedded in the story, and that they become more or less overt in various moments.
But even if you read all of the fantastical elements as metaphor or dream, I would say that this story fits fairly well into a borderland of sf.
I should note that I waffle back and forth about this topic a fair bit over time. In the past, I've had periods of being not entirely comfortable with labeling this kind of story as sf, so I sympathize with those of you who feel that way. See also the second half of my 2005 blog entry about unheimlichkeit, and a discussion in Ben's blog from 2007. At the moment, I'm in a pretty broad-definition frame of mind, but I might not be next time you ask.
And by the same token, nothing I'm writing here is intended to tell anyone that you're wrong if you're uncomfortable calling this story sf. Everyone has their own preferences and reactions and definitions and gut feelings.
So I'm not saying anyone should vote for “Wakulla Springs”; I'm just saying that if you really liked the story, it's okay to vote for it even if it doesn't fit into the core of what you consider to be sf. Boundaries can be flexible, and the Hugos aren't bound by any one definition.
(See also the Facebook comment thread for this post, which I think will be publicly visible even to people without Facebook accounts.)