A water logged block can be pushed by a piston and the water goes along with it, and it can be pulled back with the same result. Also, if you push a waterloggable block into a water source block it destroys the water while it should just occupy the same block. My suggestion is that piston arms don't destroy water when extended into it (and any non-solid block pushed into water just becomes water logged) so when a water logged block is pushed or pulled the block moves out of the water but the water can remain in place.