AVC is great stuff.
As you have mentioned, it is great for repelling flies - and since I have 2 chestnuts (chestnuts seem to attract more flies), I will be giving AVC a go this year.
I have also read and been told AVC is good for aiding joint problems (such as arthritis, stiffness, etc), and recently been told the wonders it does for geldings. I am a bit paranoid about my horses health, espec geldings 'bits' (not sure if I can go into details here :p ). AVC is said it helps keep the 'bits' running clean, and aids in preventing stones/crystals.
I wouldn't, however, put it into their only water supply. While AVC is good for them, too much of a good thing isn't ;) Plus, no matter how much anyone may like a certain drink (i.e. For me, I just looooove peach ice tea), nothing beats water to quench the thirst - and I'd be worried that my horses weren't drinking the water, or recieved a poisoning from having too much AVC.
AVC is also good (diluted) for insect bites :)
I smelled the AVC with garlic ... I don't think my horses would take it :o My gelding couldn't care less, and gobbles up everything, but it really does scrunch up your nose a bit hehe