Yeah, I just tried this and it doesn't work. I could understand the balancing problems, though - water can be gotten infinitely with a BC pump powered solely by RS engines. That'd make for a super cheap 2EU/t generator without placement constraints, thus at least 4 times as "awesome" as solar cells.
However, I feel this is somewhat inconsistent. I'd rather have an extremely nerfed version of piped water mills than not following the "we accept pipes now" logic. My spontaneous suggestion would be to say that if a BC pipe gives a water mill water (a certain amount of buckets per time), it will work as if it were surrounded by water completely.
That way, you could build a huge dry array of generators not stronger than solar panels which also need a water piping system that needs a bit of infrastructure to work. I imagine it's going to be a bit of a hassle building it with all the cables , buffering blocks , pipes, pumps etc. The player would have to decide whether they'd trade resource costs (water mills are way cheaper) and independence of sunlight and height for an engineering challenge. This would be one for the money saving kind.
What do you think? Also, emoticons.