What I expected to happen was...:
When you waterlog a rail, you expect it to prevent explosion damage like normal water does. 

What actually happened was...:
The damage was not suppressed or prevented, and all my hard work exploded

Steps to Reproduce:
Place an activation rail, surrounded by solid blocks, then waterlog the rail.

Place a tnt minecart on top of the rail

Power the activation rail.

If you try it with normal tnt, it does what you expect, even when you make the water 2 blocks high.