but wouldn't an upgraded intercooler be a better long term solution...
Yeah, but it has only so much of an effect. There's only so big of an intercooler you can mount behind an Evo front bumper....and even that might not solve the knock problem completely, while it can affect turbo spool up and whatnot (based on increased pressure drop across the i/c).
Water injection can harness the power of your engine by making the fuel/air mixture ion your combustion chamber "act" like one of higher RON. You'll have alot more flexibility.
Of course...you can always
tune your ECu for local gas w/o losing hp. Check with
R. Mutt or
Sanctifier for details on that.