Waterhook adds an event to Forge that is fired when Minecraft creates a water source block (infinite water).
Mod authors: To use Waterhook to prevent infinite water: Subscribe to the event info.loenwind.waterhooks.WaterFormEvent. Cancel it when you want to block infinite water. It is a sub-class of net.minecraftforge.fluids.FluidEvent, you can subscribe to that one and check the string form of the class name if you don't want a hard dependency on this mod.
Players: From version 1.2 on you can configure it to just disable infinite water completely. This can be done in the config file or with the ingame "Mod Options" menu.