I have done this sucessfully, brewing 12 gallon batches at OG 1.062 and diluting post ferment with 3 g of pre-boiled water for 15 gallons of finished beer with an effective OG of 1.050. The last beer I brewed in this manner was an american lager that placed in multiple competitions. I am not sure how far you can push the limit here, and would not recommend diluting a beer with 50% water (20% worked well, and I will likely try this again with other styles).