People with (even undiagnosed) kidney problems who abruptly begin drinking large amounts of water can indeed seriously harm themselves--their organs, as you said, cannot process it. However that is not a water issue, it is that individual's health issue. Most water intake should be gradually increased.

There is an interesting book called "Your Body's Many Cries for Water" that I recommend. The author is a little bent about the American medical system not appearing to be on the side of genuine health (gee, like that's a surprise...) but other than that, his explanations are good, there are little drawings that example what he's talking about, and it really spells out how the body uses water, and why it needs it, and the effects of dehydration.

PJ