yes
I'm not sure what style house you're looking to do, or what you're used to, but you can definately do 2 stories and probably 9 foot ceilings

My area has a 30' height restriction with a lot of 2 story houses. our new second floor is 29'6" with 2 full stories of 8'6" ceilings and a decent height attic.

the water view is your only ???
my boss's house has a great waterview from the walkout basement and higher as they're right on the water.

We aren't sure about the style but like cottage/
craftsman/shingle/farmhouse -- We would have views on at least three sides but unable to do a walkout basement because the lot is fairly level. The water view would be on the second floor but mountain views on both.

We're at 2 stories and a walkout basement, and our height restriction is 33ft in total, and 27 above grade. We have 8' basement, 9' ceilings x 2. If you do the math, i think you could even have 10' ceilings, and not hit your height restrictions. If you don't do roof trusses, you could even build in a small attic.
We're building towards a view also, and the best views are from the bedrooms. I almost wish we'd built in a flat roof deck, but we have enough balconies that I don't mind so much.

The standard restriction in DFW in residential zones is 30ft and we've got a lot of two story houses.

We have a 29' restriction above grade and our main is 9' and upper is 8'...pseudo craftsman with pretty tall roof. YOu could probably do 10', 9'.

There are a number of different definitions of "height".

Look at the by-law to be sure exactly where you measure from and where you end. In some jurisdictions, height is measured from the crown of the road the house is on. Or it can be the grade at the house, averaging any variations. I have seen height defined as the midpoint of the roof slope or the top of the highest roof.

Before you can determine ceiling heights and styles, you need to know the parameters. For instance, when heights are restricted and you still want high ceilings, flat roof styles are preferred.

The usual purpose of a 32 ft height restriction is to allow a typical 2 story house but not a third story.

However, but as worthy points out there are many ways to measure the height of a building. Where I live that height limit could allow 2 stories with 9-0 ceilings and another story under the roof slope with dormers (2 1/2 stories).

A walk-out basement could cause a problem if the average grade is used as the base of the height measurement.

The restriction states: 32 feet in height measured from the highest base elevation immediately adjacent to the building prior to excavaction.

prior to excavation

To avoid problems with officialdom, have the surveyor mark those elevations beforehand.

Keep in mind that the deeper into the ground you place the house, the more room you have for higher ceilings on both floors. However, the downside is that the basement is left with window wells or very short windows--as little as six inches of glass.

If the 32 ft limit is to the ridge, it would allow the first floor to be 2 ft off the original grade, the ceiling height of both floors to be 9 ft, the second floor thickness to be 1 ft., the roof slope to be 9 in 12 and the house width to be 28 ft.

A steeper roof slope would force the house to be narrower and a lower slope would allow it to be wider. Placing the first floor higher or lower and the second floor ceiling height at 8 ft also affects the width of the house.

If you keep the width narrow enough for a steeper roof line I would recommend a Shingle Style since IMHO it is difficult to successfully adapt the Craftsman and Cottage forms to a 2 story house. Alternatively you could consider the Greek Revival style (very popular for farmhouses).