my goodness that was a long post :P if you've had coolant and water mixing, then you definately want to flush the block. if you don't, you could end up with a blockage later on and be back where you are now, or worse
and yes, i've heard of water pumps dying shortly after this happens too. really, it's just making evident any problems in the water pump that are already there. wether it starts leaking in 2 weeks or 2 years, your car has probably already had 10+ years of service out of it
if i were in your position, i'd just buy a new water pump. if you don't want to spend that much money, why not get a water pump from the wreckers (cheap), put it on, flush your block, then when the wrecker pump dies in a short time, put your original one back on
i've never used special water in my radiator, just what comes out the kitchen tap. i add half a litre of nulon green coolant stuff in, never had a problem