This is an interesting question which we have discussed here a number of times, and everyone has their own take on it.
My gambols in the highways and byways of whiskeyana have convinced me that it was taken straight sometimes. Very often it was served with water or soda (the highball). As often or more, it was served in a cocktail.
The best whiskey was sold in bonded form (100 proof). Very little whiskey, except in the uncontrolled frontier days, would have been sold at a higher proof than that. A lot of whiskey was sold at between 80 and 100 proof. Old Forester's original proof, when it was still a blend of straight bourbons, was 90.
For straight sipping except as a curiosity, I too would not drink anything uncut over 107. Even at 100-107 that is a very high strength. Often such whiskeys benfit from a dash of water. As to what kind, I use any clean water that is at hand. I just don't think for practical purposes it matters what kind. The taste of whiskey does seem to open up with a little water but then too it matters what proof you start at, and what intensity of flavors you like. I've read that some experts like to taste at 20% abv or something like that, but this seems too low unless you are tasting to calibrate the palate for consumers who drink with water or ice and water. I generally will drink the whiskey at whatever proof it comes and if it seems too "much", will add some water to soften it.