As far as I understand it*, water doesn't (necessarily) neutralize acid. It only dilutes it.
If I'm wrong, come at me gently.
*My high school learnin' is long gone, so I quick-Googled.
I suspect it comes down to acid-to-water ratios. The acid, true, will never really disappear in water. Yes, it will dilute, you are correct (I think). The only thing I recall from 11th grade chemistry that cancels acid is if you have something alkaline of equal parts mixed into it to balance out the pH factor. Diluted acid in water, though should be enough to at least not have to worry about melting holes in ship hulls. If you have a vat of Kaopectate hanging around, that might be useful.
Then again, I only got a C+ in chemistry, so I could be totally talking out of my ass.
In water, strong acids and strong bases dissociate completely, producing H3O+ and OH− ions, respectively. Different acid strengths can no longer be distinguished based on the pH value. It's known as the "leveling effect" of water.