I like the idea of being able to drain water away, but I’m not sure it holds water (sorry, couldn’t resist) 
All it would take is for a player to fill an [insert number here] plot reservoir with source blocks and then knock out a retaining wall, and you have a pretty big tidal wave.
Unless you can’t stack water source blocks… but that would also mean the rest of the lakes/oceans on the world would only be 1 block deep, as it would need to use the same mechanics.
The point of this type of mechanic isn’t that it can’t be done. It’s that any would-be griefer would need to spend at least as long building up a reservoir as it would take any victims to drain it out. Typically they go for the easy bait they can do in five minutes and will spread griefs for hours or days.
I’m actually more concerned about how much processing power it could potentially use if someone sent a really big wave down a mountain.
I guess I don’t understand why this is such a huge issue. Allow you to get water and lava and it only flows in your plots. I don’t see how there is any issue with that.
There is no reason to have flowing anything that goes beyond the maker’s property line. If they want it to look natural that it disappears just make a big hole that the water or lava drops into and appears to go underground. If don’t feel like doing that then just live with the fact the water or lava has a straight edge at your property line. People can’t build a slide that goes outside their property. They can’t build a fence that goes outside their property, or anything else (and expect it to stay). There is no reason for them to cause other things to leave their property and cause effects on other players. There is no real issue about that anymore than you can throw boulders off a cliff and destroy someone’s building down below or dig a sinkhole under their property and make it all fall in. There is no real issue. It’s just some people have desires and in this case those desires have many negative effects on others. Also, imagine the lag if people were causing flowing rivers of water or lava wherever they feel like.