Instead of trying to "drain the ocean" to get the Coral Highlands, why don't we just have it evolve analogously to a water biome, but be based on more "normal" land creatures. It may be called "coral" but what if it just looks like coral? The tiny critters (polyps) that live in the structures could be crepuscular or otherwise spend most of their time hiding in their constructed shells. Maybe they're tiny little crab-like creatures instead of squishy polyps, something a little more conducive to land life.
Coral shells are made of calcium carbonate (limestone). Bones are comprised in large part of calcium. I think we can work out a way for the bones in the valley below to feed coral "reef" building up high. We just need a creature to break down the bones and excrete the calcium somewhere for the polyps to consume. I don't remember the creatures of the Rotten Vale very well but I know there are several very nasty ones that could believably feed on bones and produce the calcium as a waste product. Maybe they want the collagen or marrow instead, which is extremely nutritious.
So we've got the coral formation generally covered. Now let's look at some of the other critters.
@IndigoFenix mentioned the jellyfish being more like floating plants. In effect that's not far from what jellyfish actually are if you look at function alone. They kind of hang around waiting for their environment to just give them nutrients. There are plenty of questions/answers out there about floating plants, like this one.
The trees that look like anemones are easy enough, they don't need a reason to have evolved that way, as long as they still function more-or-less like trees we're used to. Maybe they could be predatory too, like an anemone. Think of a giant pitcher plant or other predatory vegetation.
The wrigglers might be a little tricky because nothing can really move through dirt like water. Even moles, some of the best diggers, can only go at a max of 15 feet per hour. I don't really have a good solution here. The dirt could be very loosely packed, but that creates problems for other critters trying to walk on it. Maybe the wrigglers could stick to areas of very boggy terrain that would be easier to dig through.
In conclusion, while it may not have evolved literally from the ocean, we can still come up with pretty good analogues using land-based creatures. Could evolution have directed this? It's possible. Could it have been directed in a laboratory setting? That would be a huge lab, but I don't see why not.
Edit: Final note, having the Rotting Vale feed the Coral Highlands isn't a big stretch. You just need a vector to transport the nutrients from one place to another. With the wealth of creatures around and the ability to create your own, it shouldn't be difficult to designate some things as scavengers that transport materials as they search.