Are we really that close to direct reuse of wastewater?

This is an interesting blog post and story.  In the context of direct reuse of wastewater, engineering and science is far ahead of what society is willing to accept (don't we all urinate in our drinking water?).  From the blog:

"After a 21-year-old man admitted urinating in a Mt. Tabor reservoir last Wednesday, the city cut off its key water supply and dumped 7.8 million gallons of drinking water. The question, again, is the logic of such a move. Even if one does not accept that, as industry experts often spouted, “the solution to pollution is dilution,” this is such a tiny amount of impurities as to be untraceable. This would be no more than 12 ounces within 8 million gallons of water."