Domestic (municipal) water in California is already quite expensive. While adopting steeply graduated pricing would indeed be a market-friendly way to end most irrigation of lawns and ornamentals, that's literally a drop in the bucket and would do nothing to alleviate the state's water shortage (drought or not). First, many Californians don't have lawns. Second, many who do have already reduced or stopped irrigation. There's less savings than you think to be had there. As for the rest of your points, the amount of water we're talking about is simply not significant. Yes, it would likely be worthwhile to fix leaks; that's often inexpensive, though it also provides a very modest reduction in waste. The fact that nonpotable water can be used for most household purposes is moot; few people have access to a source of nonpotable water, and installing a graywater system is usually cost-prohibitive. Worse, graywater is not nearly as useful as clean but nonpotable water, unless intermediate treatment is added as well. That all represents a large investment for a small return, and in any case the problem in California isn't the cost of treating water but the lack of any water at all. Spending hundreds or thousand of dollars (at least!) on a graywater system so you can save a few gallons a day flushing toilets with recycled water is a poor investment even if the price of water were several times higher, not to mention that there would be no incentive for landlords to make such an investment even if it were profitable for homeowners.

But really, your opening sentence puts itself in focus: the units you use are gallons. The problem in Califonia is not one of gallons but of cubic feet per second and millions of acre-feet per year (the units that are actually used in the water industry and usually in water rights law). Household water use, wasteful though it may be, is too small a share of the state's consumption to constitute a crucial part of any solution. Public service messages about conservation, higher or graduated pricing, and mandatory rationing are used primarily to remind people that water is a limited resource; these approaches help to rein in rampant waste but do little else. They will not play a major role in reducing total consumption and will play no role at all in increasing supply, if in fact that is even possible. In short, these approaches are at best a secondary part of any solution.

Instead, as others have pointed out, the focus needs to be on agriculture and, to a lesser extent, industry. Agricultural users pay far less for water than domestic municipal customers, and they use the lion's share of it statewide. However painful the adjustments that will be required, no solution that does not radically reduce agricultural consumption will be an effective or meaningful one. Even if no one were allowed to live in California except farmers, the crisis would still be severe and those farmers would still have to bear the burden of addressing it. There is no escaping this, and if the public messaging centers on domestic use even if agriculture is a major behind-the-scenes focus, the planners will be doing the people of the state a great disservice by encouraging them to believe that largely irrelevant changes in their own behavior will address the problem. It would be much better to encourage domestic users to make sensible investments in saving water that will provide them with a return, but to openly acknowledge that the big-picture problems will require agricultural users to make most of the adjustments.