There is a tradeoff between concentration and the rate of use of your tank oxygen. This setting is a good compromise. Just ozonate for five minutes or so, and drink it down.
Distilled water is ok.
You're not trying to 'hold' the ozone for any length of time anyway. But I hope you have a good source of minerals, because that is important. Liquid trace minerals are the preferred form. The gas works perfectly well. It seems like a needless complication.