Here it mentions that it is better to mix wine and grape juice than to have plain grape juice. How about mixing water with wine; is the diluted wine still more preferable for kiddush and havdalah? (And does it matter the ratio of wine to water?)
In addition, a Rosh Kolel has mentioned that it is questionable if one fulfills his obligation of חרות with grape juice for the four cups. Has anyone seen a source for this? And would this impact the advantage (if there is one) grape juice has over diluted wine on Pesach?