The dual pipe system is a very good idea. Household and industrial water is removed and reused (cleaned) as industrial water (after all, industry rarely needs distilled standard water). Clean river and rain water is used for household use. Effluent (toilet) water could be kept on a third system, separate from household water and commercial use. Commercial water that was first used as toilet water is fine, but for something else the future is bringing to us. The small methane gas power generators that will be a standard feature of a house, just like the rainwater tank or the solar power grid. These things are inevitable as the well fed populations of today expand.
Using the recycled effluent water for drinking is unwise as it may still have traces of minerals and antibiotics that contaminate it. Sure, it is probably clean physically, but energetically one cannot be so certain. In homeopathic schools of thought, water retains the vibration of what it has contained. If it has flowed through rivers or fallen as rain, it is fit for consumption. Also, psychologically, having water that is "pure" can really effect public morale.
Also, with cleaning water to reuse for drinking, mistakes can be made. Although it is a slim risk, if it went wrong (old, dirty equipment, wear and tear, human error) the effects could be dire, with huge class actions (legal bills). The costs of maintaining a system to a very high standard so the risks of disaster are lessened and insurance must be taken into account by both governments and private operators who are contemplating using waste water for household use. When times are easy it can look good to do, but what about when times are tough? If there are serious cutbacks on spending in leaner times, could cost saving endanger users?
I think letting recycled flow back into the ground water system is fine. Ponds, pools, lakes, rivers, mires (particularly) will clean the water as it passes through silt and plant life. In the homeopathic sense, it is re-energized by being in nature. If returning it to river systems, deltas are a better choice then rivers flowing inland, because of cases of disaster, but also there are more bogs and swamps, which is one natures ways of causing extremely clean waters.
Rates and taxes (and tax exemptions) could easily arranged to encourage good water use, pay for production costs and even raise revenue for other projects. One can imagine that in the near future laws being passed that the building industry must include a water tank, recycled water pipes, solar panels and methane gas power generators. New suburbs will require water recycling facilities. These are all potential cash cows for governments. At worst, they will pay their way.