Basically yes..when more than about a 1/2 teaspoon of water is ingested by the engine, very bad things will happen. Unlike the trapped air, the water will not compress. It will blow out gaskets & more, but it won't compress.

So when the piston is coming up on the compression stroke, the water will be forced up into the top of the combustion chamber, causing the engine to stumble (at the very least) or stall outright.

If the pistons, conrods and cranks are all robust and the amount of water is very slight, you might luck out and only have to replace the head gasket and get a new set of spark plugs. but more often than not, significant engine damage is the result. Snapped conrods, shattered piston rings, or even structural failure of the piston itself.

So if you choose to run a CAI, IMO it's foolish to not use a bypass valve as well. The best plan of all is to fabricate ducting to supply a short-ram intake with a supply of cold air -- without sealing the intake tract off.