In one of my cities, I am planning on building a RHW-4 network that connects downtown and a proposed residential area. However, I am planning to underpass the existing road using hole-digger lots I downloaded from Simtropolis. Whenever I drag the road over the lot, it doesn't dig the hole like it's supposed to. Just turns to red saying "Unsuitable grade for construction".
You have to make sure everything is perfectly flat. Use single road tiles to level out the area then try again.
It's more likely that the result of the digging would take it below water level which won't work.
I tried using a Flexible UnderPass (underground road under avenue, since the RHW didn't work) but after a while, the whole game went to a CTD. I was absolutely furious. Just so you know...