Took me a while to find a translation of the poem, by Witter Bynner:
With my wine-bottle, watching by river and lake
For a lady so tiny as to dance on my palm,
I awake, after dreaming ten years in Yangzhou,
Known as fickle, even in the Street of Blue Houses.
It looks as if the translator didn't really get it, but in this poem "rivers and lakes" should be appropriate. The poet was writing about his ten years in 扬州, where there were plenty of rivers and lakes. You could imagine him riding on a vessel, with a drinking vessel in his hand, watching girls dance and wasting himself away.
As for the extended meaning, oh boy that's hard. 金庸 has a book titled 笑傲江湖, when translated to English, it becomes "The Swordsman", "The Legendary Swordsman", "The Smiling, Proud Wanderer", and "Laughing in the Wind". It looks like everyone is spending their best effort to try to avoid translating 江湖.
I guess people doing this because they thought they are translating up to a more prestigious language. They try to avoid anything that's slightly less comprehensible to an English reader, lest he gets offended by a few unrecognizable loanwords and throws the book away.
That's hardly the problem. James Nicoll once said this:
The problem with defending the purity of the English language is that
English is about as pure as a cribhouse whore. We don’t just borrow
words; on occasion, English has pursued other languages down alleyways
to beat them unconscious and rifle their pockets for new vocabulary.
English cares not a bit about its purity, so I would suggest that we defile it a little more by translating it as "Rivers and Lakes", or even "Jiang Hu".
江湖 is a world. It's a vastness of turbulence. It's a world where people obtain their loafs at the peril of their lives. It's the world where hermits bide, where wanderers ride, where swordsmen stride, where clans collide... It's like Dungeons and Dragons sans magic and monsters. Now, describe it with an existing English word.