Just back from an eight-day (anniversary trip) stay at Aqua Palace, and have to say that the hotel for the most part lives up to its incredible Trip Advisor reputation (which was basically the deciding factor in our choosing it). It's a beautiful building in an great location (< 5 mins to both Rialto and S. Marco); it is a bit tricky to find the first time (even for repeat visitors to Venice) but once you get your bearings, it quickly becomes clear how wonderfully central (yet mercifully tucked away from the hordes) it is.
The rooms are spacious, stylishly decorated, and kept very clean (the same is true for the entire hotel). The staff is professional, helpful, knowledgeable, and pleasant. The complimentary breakfast is fine and filling and presided over by a very personable waitress. And given the stratospherically high cost of top-end Venice hotels, it's definitely very good value for money.
All of which is why I've rated it as I have. That said, there are a few things that prevent the AP from truly being a five-star hotel -- some of which they could easily fix, others which are beyond their control.
First, the latter: as others have mentioned, the waterway below the hotel is a for-real working canal and the quaint Ponte Malvasia (over which our room was located) appears to the rubbish and recycling collection point for a good portion of the entire sestiere. Not surprisingly, it's really loud -- and this is coming from someone who's lived in busy neighborhoods of London and New York for the last 20 years. It was a daily thing during our visit, but it only started before 8am on one morning, so we got accustomed to it. (And it should be said that during other parts of the day -- and, most importantly, overnight -- the rooms are wonderfully quiet.)
As for little things that could actually be improved, and I offer these as constructive criticisms:
--The lighting in the rooms is romantic, almost to a fault -- a floor lamp in the sitting area of our suite would have been most welcome, as would have some slightly more useful illumination in the bathroom.
--The hotel seems to be somewhat on the fence about whether or not it wants to have a bar in the evening. It (sort of) turns the breakfast room into one by putting out candles and (sort of) making a person available to serve you a pre-dinner spritz and a little bowl of chips. Sometimes. One night we ended up lighting our own candles and rummaging around for snacks ourselves while we were killing time before a late dinner reservation. It would actually be fine if it was just a self-serve honor bar (or if they didn't have one at all), but as it is, it's neither/nor in a way that leaves guests hanging a bit.
--Finally, it would a good idea to send someone up to the rooms every month or two with a little can of paint and a brush to touch up the inevitable dings that the entryways get from luggage etc. It's obviously a minor thing, but when you open the door to your €500/night room and the first thing you see is a bunch of black smudges and scuffs on the walls (even if it's quickly followed by a glorious marble bathroom and chic fabric-covered walls) it has an outsized impact.
Both times I’ve been to Venice I’ve stayed at small boutiquey hotels (AP this time, the Ai Mori d’Oriente in Cannareggio last time) and maybe if I get back agin I’ll finally try one of the grand dames (Bauer, Gritti Palace, Danieli). But for value, location, etc, we were very happy with our choice of Aqua Palace.