No, I don't add any addition water. Just the original 7 to 8 oz that was used to brew the coffee.
If I am in a rush, I might throw in a few ice cubes to cool it down, but that doesn't add a lot of volume.
I do not notice any stimulation. I am able to do them in the evening and not affect my sleep.
Most of the liquid comes right back out after retaining for 15-minutes. It seems that if you lay on your right side or back, don't use too much water, and don't retain too long, the stimulation not noticeable.
I very rarely will have a small cup of coffee if I need to drive some distance in the morning and didn't sleep well.
I DO notice the impact of drinking it orally. There does seem to be a difference.