diluting it with water isn't a big problem, we all do it when we first start, it's a way to get used to the taste and texture. Keep doing it until you can ween yourself off the water. The best benefits on UT come from trying to take as much urine as you can (not letting a drop hit the ground) - I don't think you should take the start or the end of it however, I have tried this and you can get sick but there's differing thoughts on this.
The basis behind taking as much as you can is that it is living water, your own spirit is inside the urine the more spirit you retain, the more you can regenerate, that is the idea. Also the antibodies are read by sensors in the throat but the diluting won't affect that. The homeopathic properties of it are considerable on their own so that is why taking small amounts is also good. The larger amounts are generally recommended for those who are attempting to overcome life threatening illness or disease they have been battling with most of their life. In this case they do this alongside a fast.