Earlier quoted context omitted.
Is it that or its conversion to steam at a relatively low temperature or its ability to rust out the brakes?
As you said, density change over the temperature range where hydraulic systems are used, and corrosive properties of water. Also its freezing point. Oils just have better properties for the desired application.
Great point - it's never below freezing where I am. It's amazing to experience water in a brake line if its not too dangerous. You get most the normal functionality if you stamp on the pedal.