The reason to use distilled water is that it does not have any calcium or iron in it. If you use tap water and you have high calcium content then you can plug the radiator/heater core faster.
I have been using the premixed Cool guard from John Deere the last few years in all of my diesels. (there are others brands out there but I get a better discount on the Deere stuff) It is not that high and the blocks do seem to stay cleaner. I had to tear into an engine I had rebuilt a few years ago. It did not seem to have as much rust and stuff in the water jacket.
If you don't think it is worth the extra cost then do use distilled water. Rain water will work too.
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Today's Featured Article - Restoration Story: Fordson Major - by Anthony West. George bought his Fordson Major from a an implement sale about 18 years ago for £200.00 (UK). There is no known history regarding its origins or what service it had done, but the following work was undertaken alone to bring it up to show standard. From the engine number, it was found that this Major was produced late 1946. It was almost complete but had various parts that would definitely need replacing.
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