mg,
You asked "why we flush toilets rather than use some sort of inceneration..and then we drink the water..."

You might be interested in the way <a href="http://www.epa.gov/owow/wetlands/construc/arcata/11intro.html">Arcata, CA</a> addressed the problem of water treatment.  I don't have the latest info on how their ecologically sustainable system is doing ten + years since they started it, but I like their approach.  Talk about "win-win!"

Genie