Injected water does end up in the oil. More at low RPMs and boost levels. Typically the water boils out of the oil, and it is important to run distilled water to avoid oil contamination. I have made milk shake in my crankcase and oil analyses have confirmed mineral contamination when using tap water.
I seriously doubt that constantly watering down oil is that great for longevity. But I would guess that regular combustion water regularly ends up the oil too, so it might not be that big of a problem.
I'd like more Oil People to weigh in on the problem, but I know that I am done playing with water while cruising in attempts to improve mileage. It doesn't come on below 1100 degrees now.