Yes it is part of the level III material.
You can send energy into the water with sword fingers or thunder palms. I haven't checked the level III material but I seem to recall that you use thunder palms over the water and you do it in counter clock-wise motion. (I could be wrong on the hand motion. I may be mixing it up with some of the other material).
Remember that the intention is as important or more important than the technique. When grace is being said at our table I do a visualization of bringing the blessing of the universal energy into the food.
Should it be yin/yang water? Good - Better - Best. What do you think?
What is the effect of the person taking it? Well a quick search shows that the human body is about 65% water, the brain is 70% water, blood is 82% water, and your are lungs 90% water. I would say the water becomes part of you. The water joins with you and the qi in the water joins with your qi.
You are perfection.
Iam2 
[This message has been edited by Iam2 (edited August 04, 2004).]
