Hey, Hampshire, as an Anglican, I have to say that we Anglicans and the Orthodox would protest strongly against the idea that “the Vatican makes the rules.” You may remember Henry Tudor having some choice comments on this issue, a few years back. 
As for the “how can you tell it’s holy water” question, I tried to address this in my first post here – the water is not changed in any way, simply set apart for use in religious ceremony (public or private). Tongue in cheek though rjung’s post was, it would be the only way to tell.
Loosely said, if it brings you a sense of spiritual satisfaction to have water which a priest has blessed on hand, more power to you, but it differs in no way from water that was created by the priest’s Boss and has not been prayed over.