I think you should do what makes YOU feel comfy, when the time comes. If she wants in the water, and you are okay with her in there, then by all means, let her in
I do think it is a good idea to have someone there just for the kiddo, that she trusts, in case it gets distracting, or she doesn't WANT to be there.
I'm "prepping" my DD with birth books, heck she's even seen a lot of the more peaceful birth videos on youtube. One of the Bradley Childbirth books I checked out from the library had LOTS of pictures of babies coming out. Oh, she'll be 3 when the baby gets here, but I'm a firm believer in explaining as much as i can to her... even if it DOES go over her head.
Later in the pregnancy, i plan on doing vocalizations with her-- can't remember where i got the idea to "gorilla grunt" and all sorts of other noises that i could possibly make while in labor. I'm usually not very vocal, so i don't want her to freak if mommy is making noises.
But i think it will be a really fun game, and knowing my dd, if she's awake when i do give birth, she's going to be a cheerleader ("come on mommy- grrrrrrr!")
A friend of mine said it made her relax more, knowing her son was watching. He was about a year and a half and when the baby came out, he said "There's my baby!"
hehe, as you can see, I'm a big fan of siblings being present- but, they should have an escape plan if it gets to be too much.