I was so absolutely sure this ideas was completely absurd that I didn't even bother to research the issue. I stand by my analysis in terms of the practicality of steam-powered flight, but it did happen. Note that the moment gasoline is invented the combustion engine will obsolete steam, requiring your world to never invent gasoline... or natural gas for the same reason... Nevertheless, I'm impressed! Thanks, @Slarty, for pointing this out! YouTube, Wiki
Whenever I hear steam-powered questions I think "steampunk." Please note that it's usually easier to explain the early creation of specific technologies than it is to explain the late development of any technology. The problem is what I lovingly call the "technology dichotomy," which describes having a high-tech ability without the supporting low-tech infrastructure. In your case, with every passing year technologies are created that will obsolete steam. Most of which wouldn't exist without the technologies you're looking to suppress (those supporting combustion engines). Here's why that's an issue:
Steam engines need much more weight to operate than combustion engines and rely on energy that's much less efficient.
Weight
The water is obvious. While the ground effect gives you extra lift, the reason planes fly at high altitudes is the air friction is a bigger pain than the ground effect is a benefit. It costs more fuel to fly near the ground. Besides, pumps add weight.
No matter how well designed, the entire water infrastructure (the water itself and the metal to contain it) is additional weight requiring that much more energy to lift.
The metal used has a ton of effect on the outcome. The 1903 Wright Brothers biplane was powered with a combustion motor made of 92% aluminum, which suggests that even aluminum is not light enough to solve the steam-powered problem.
Add to this the nature of the two engines. The combustion engine wants all the combustion it can get with as little heat possible. It's the explosion that's valuable. (Desire: High combustion, low heat.) Compare this to a steam engine where you want all the heat you can possibly get because the actual combustion process is worthless to you. (Desire: low combustion, high heat.) Said another way, combustion engines are designed to withstand the force of combustion. Steam engines are designed to withstand the force of heat.
Steam engines benefit most from an alloyed metal that is light with excellent thermal conductivity: but the technology infrastructure to develop that alloy would bring about better forms of motive force than steam.
Fuel Value
Steam fuel is remarkably inefficient. A pound of coal produces 10.1Kbtu of heat. A gallon of gasoline produces 146.5Kbtu of heat. (Source) A gallon is 231 cubic inches. Coal density changes its volume substantially, but an average value appears to be 55Lbs/cu.ft, which means there are 7.35 lbs in 231 cubic inches for 74.24Kbtu of heat.
Coal produces half the energy and is required to lift additional weight. Ruthlessly, that's like saying it has 25% the value of gasoline.
The solution: bring a future technology back
Frankly, your solution is electricity. I have serious doubts that a steam engine directly driving a prop could possibly lift a plane into the air. And that ignores the fact that you might need to land every 200 miles to refuel and rewater.
You're real goal is to make the need for the steam engine as small as possible.
Combine a much smaller steam engine with an electric generator, some batteries, and a good flywheel, and you're good to go. It might be possible to get that ruthless 25% value up to 75%, which hits the believability zone.