Water is not a bad TIM , not the best, but much closer to the " best" side, than to the "worst" side of things. Also consider the fact that the gaps between the pin-tops, are virtually nonexistent, though not entirely, and we know that a TIM joint's thermal transfer is inversely proportional to its length.... (thickness) correct????
for argument sake let's pull some imaginary numbers to illustrate the concept... say water has a number of 0.0005, which is representative of its thermal transfer, and that needs to be as big a number as possible... obviously not good as it stands now...
BUT the distance between the two surfaces from where the heat needs to travel, is 0.000001m...
now 0.0005/0.000001= 500.
again highly imaginary numbers, only for illustration. The smaller the gap, the lesser negative effect of the TIM not being Diamond.
In a waterblock, you can hardly ask for a better tim than Water....