So you can stay hydrated by vomiting and drinking the vomit back up? If that is the case, I think it is a bug. Vomiting should dehydrate you a little more than drinking it hydrates.
That's not exactly the only case where DF doesn't adhere to our world's logic. The self powering (with a surplus) dwarven water reactor is probably the best example of this. Real world physics doesn't allow a single bar of ash to support an arbitrarily large load either, nor support of flimsy floors of unlimited length supported in one corner by said ash wall.
Yeah I know, but from what Toady said about it, it is clear that he tries to make the simulation as realistic as possible and physically impossible situations arise because of limitations:
1. Some physics are plain hard to model correctly (introducing more fluids beyond water & magma is a good example here: things get incredibly complicated if you mix them and they don't simply form stone).
2. Some physics are hard to model correctly without blowing up the CPU time needed for a single timeframe. The dwarven water reactor is a consequence of this: a realistic model of streaming fluids will be incredibly tough on your CPU. Even the relatively simple model we have now can easily eat into your FPS.
3. Some things are hard to model correctly AND hard to model in a realistic way without making them terribly hard to understand for the player. This is why cave-ins are modeled in an extremely simplified and unrealistic manner: at least the player can accurately predict whether a construction will be stable.
So it is inevitable that we end up with some physically impossible behaviors.
However, the vomit situation is a very simple oversight. I suspect that vomiting right now does not lower your hydration level at all, or does it? That would be very easy to fix.