If your home was built before 1978, there is a good chance that lead paint was used in its construction. Scraping, sanding, or removing old paint can release toxic lead dust which can cause serious illness in children and pregnant women. Special handling is required when working with lead-based paints. If lead paint is present in your home, you will need to hire a lead-certified painting contractor or lead abatement contractor. Before getting started with your exterior painting project, consult your local building authority or visit www.epa.gov for more information.
Oh, where to begin? Let me start with 'watered down paint'. 25-50% before the material gets to the site? Impossible. You would basically be painting with water at that point. It would be less of a hassle, and cost, to simply use proper material. You would be forced to apply three coats instead of two, as the coverage would be horrible. Whatever cost you think might be saved in materials would be lost in labor.