1) You might run into long-term pump damage if you use dye. Most organic dyes precipitate out and cause increased wear on the pumps. You will most likely lose your warrantee on the pump if you use dye. Don't let that stop you, though. Putting a waterblock on your CPU most likely voids the warrantee on your CPU too.
2) You will need something to stop corrosion and biological growth. Either get a commercial additive that takes the guesswork out (Swiftech and Dangerden both sell a mixture to add to distilled water), or make your own. There are a bazillion ideas about what to use. I use distilled water and antifreeze. It's cheap and it works. The drawbacks are that it is thicker than water, which lowers performance, and (for you) it's green not blue.
Do a search on additives in the ProCooling forums. You will be amazed at the number of posts on the subject.