[Edi]

The 3+ slot bug was fixed due to its abusability. The reason why two bottles of living water and two bracers of protection stack is that they are tied into different mechanics than most items.

The bracers give armor protection, which has no limitations, and when blessed with E9, the blessing is applied to all armor (and since it's misc prot, it doubles).

The bottles of living water on the other hand each cast a onebattlespell, in this case summoning a water elemental and that only comes into play in combat. If you equipped a unit with two scutata volturnus shields, they would probably both cast shocking grasp, or if you put two spirit helmets on an ettin, you'd get two lightning bolt casters. Though those have not been tested.