Hey,
With the PC, the most aggressive product that Meguiar's offers is #83 DACP. Products like #84 Compound Power Cleaner, and #85 Diamond Cut 2.0 are for the rotary buffer only.
Water etching can take 2 forms: 1. on the surface as in mineral deposits or 2. etched into the clear coat. Based on the products you have used so far, it appears your water marks fall into the #2 category which may require a rotary buffer to remove. While the PC is an excellent tool, it does not have the power to remove major defects. Further, if one goes too aggressive with the PC, the result may be a dulled down finish that may be difficult to correct without a rotary buffer.
Here is what I would try first: Meguiar's ScratchX with a piece of cotton Terry towelling. REALLY work the product until it basically disappears. You may have to do this a few times over each etching. Then follow this with a couple of passes with #83 DACP and the PC set to speed 5. Work the product until the residue bascially is gone, but do not dry buff. This may take 3-5 minutes per 2'x2' area for the diminishing abrasives in the product to break down properly. If this does not do it, and it may not, the etching may be pretty deep and will require the use of a rotary buffer to remove.
Going through the CC can happen with any abrasive cleaning product. When you get into the real heavy compounds, it gets even easier to go through. And remember, if you go through .3-.5 mils of clear, your paint may suffer CC failure in the not-so-distant future. So caution on the level of aggressiveness of the product used as well as its frequnecy of use must be observed. Therefore, if the above does not remove the etching, it may be prudent to seek out a professional detailer with a rotary buffer rather than going more and more aggressive with the PC.
Tim