They don't need to be water cooled, actually. Some turbos are oil cooled to start, but because they're not located under the hood where heat builds up and it's hard to escape, they stay cooler. The air in the back of the car is much cooler. The kits all use a separate oil pump, oil cooler, and (I believe) reservoir. So the turbos do stay cool. However, I have heard that the STS oil pumps and what not are complete junk. (Just what I've heard) A self built kit would put that on you, though, so you could make a better oiling system.
BTW, I haven't heard of anyone that's had water, mud, etc problems.
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2002 Corvette Z06 - Totaled
2003 Corvette Z06 50th Anniversary
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