Correct on the head stud holes, however, this is the first time I have heard about water passages having to be fiddled with got any additional information?

For the front case, you have three options:
a) 6-bolt - no longer can mount 2g crank sensor
b) modded 7-bolt - have to machine it to match up the holes, but can use the 2g crank sensor
c) 6-bolt hyundai - not doable on an AWD without some voodoo, you need the matching oil pan and it doesn't have the proper clearance

The whole front case is all about keeping the 2g crank sensor. The 1g's get that signal from the camshaft sensor. With a stock ECU it is possible to split the signal from the 1g cas to the 2g cam and crank signal. The negative is you'll get a CEL for misfire most likely, with DSM Link, you can choose to ignore that CEL. The 1g cas is capable of providing both signals, however, the 2g cas is not.

Theoretically, the 2g setup with the two different sensors is the better system. However, it isn't definitive. People have done great things with feeding the 1g cas to both ECU inputs.

What I'm doing with my 2g head, 6bolt block is option 4 - Kiggly racing 6-bolt trigger http://www.kigglyracing.com/parts/cranktrigger.htm. It is meant to give the crank signal to the 2g ECU. This allows me to keep using the 2g cas and have a proper crank signal.

So in summary, unless you pick up a kiggly trigger, you need a 1g cas and some modifications to your wiring (or buy a pre-built harness) to do a 6-bolt in a 2g.

Actually, all above is kinda missing the mark. To use a 2g head, just the holes on the head have to be bored out a bit to fit the larger head studs. Everything else is exactly the same as a regular "6-bolt in a 2g". The one bonus of using a 2g head is you can use either 2g waterpipe, thermostat housing, and neck OR 1g waterpipe, thermostat housing, and neck.