As in real life. Water have oxygen! Maybe author add a "Oxygen Water Generator"? NASA on Mars, for example, wanted to create oxygen from the water.
There was also a time where I think it was BC pumps that negated the infinite water thing by sucking up source blocks, so water in your 2x2 would eventually just disappear.
Yeah, they do suck up the source blocks, but a 3x3 area is enough to regenerate missing sources before it can absorb the remaining blocks and stop the cycle. I exploit this method myself, so that still would be an issue.