As I understand RAW, a unit that uses it's Overheat Value (OV) that is in water will not benefit from the cooling from that water. I base this on the sentence that states "Any unit that used Overheating in the current turn will ... not cool down at all in the End Phase." (p. 53).
However, I ask because the "Steps" in the same section seem to somewhat contradict this.
So, does a mech using OV still benefit from water?
As to overheating, in ALPHA STRIKE, all mechs are converted to be Heat Neutral. This means that during the conversion process, to aid in speed of play, the mechs were converted across to allow for play not tracking heat. Think of it as when playing regular Battletech, you opt to fire just 3 Medium lasers instead of your full arsenal of 4 medium lasers.
However, there were a lot of mechs that had damage output way beyond this 'balancing act' and so they had a OV value.
Now under normal circumstances, these mechs could fire and do more damage than the normal 'heat neutral' damage output, and again, normally would not cool down in the end phase. In regular battletech, this would be akin to generating 11 heat (2 from running, and firing 3 medium lasers for 3 heat each), but having a mech with 12 heat sinks. If this same Mech fired all 4 medium lasers, then it's going to see some heat carried over for the next round.
However, standing in water in regular Battletech is like having bonus heatsinks (provided those heat sinks are in the legs), and those heat sinks can dissipate twice as much heat a turn. Have 4 heat sinks in legs? That's like having 8 of them.
In ALPHA STRIKE, we don;t track things like that, so easier to just say, Standing in Water counts as lowering a heat scale by 1 if needed.
So, Firing a Mech with an OV value of 1, sheds all heat. Firing an OV Value of 2? End result is you now have a heat value of 1.
Have an Engine Crit that gives a heat value of 1 if you fire your weapons? Standing in water will indeed remove that penalty.