If you enter the nether and place a cauldron, and then put water in it, the water does not get burned, but when trying to use the bucket to obtain the water again, it will NOT work, and breaking the cauldron obviously drops it, but then the water disappears. Also, if trying to use the water in the cauldron to stop yourself from burning, it also does not work. It almost seems like the texture of the water is there, but none of the behaviors work.