Ever since I started competing 5 yrs ago that has been one of the debates. I don't know if its "old school" or what. The thing is that distilled water is basically "dead". Your body uses the stuff that is in regular water (note I'm not talking about the myriad of things that come in typical city tap water... but rather the good stuff). What I've come to understand is that for everything that we eat that occurs naturally on the planet, our bodies generally have a purpose for it. If you alter it some how, it either serves no purpose or is detrimental. (For ex, diet coke may not kill you, but is it really helping you at all??? The general rule of thumb on anything you drink other than water is that you need 2x that amount in water to flush it out of your system.)
So distilled.... here's the best use of it that I seem to have come across. For my competition in May, I drank filtered tap water or bottled water 100%. However as I cut my intake down during the last week, I came to realize that literally 1/2 of the day's alottment was going to helping me chug down my supps (EFAs, digestive enzymes, vitamins, taraxatone) or trying to choke down yet another dry potato. So if that's where its going, what's left when I really need it?? So to that end, my trainer gave me an allotted 12 oz of distilled water to take my supps w/ and use the regular water after my meals. That seemed to work just fine.
But note that when you are in the last few days of pre-comp & especially the day before & the day of, you *REALLY* need to watch your liquid intake. It can really screw you up if you aren't paying attention.
On a side note, if your electrolytes are out of balance from the various things used to dump water, that is probably the biggest thing you need to be careful of as a competitor -- maybe not so much as a figure girl because you don't need to dump every ouce of subQ water, but if you do start feeling dizzy while on stage or during show day, throw down a couple potato chips. The salt will help to balance out your electrolytes.