It can be done! It's possibly one of the Dwarfiest things I've ever heard of in Terraria, but it's possible to drain an entire ocean into the underworld. However, it has unusual results. Let me explain.
My brother and I dug a ten-wide path at the right edge of the map, from the underworld to the bottom of the ocean. After placing a row of active stone blocks, we proceeded to dig away all the sand - and the water was in sight. We built a little room at the bottom, hoping to see all the water flooding past, and then a torch near the top so we could see proof that the water had been released. When all was set up, we got into our observation room and flipped a switch (you have no idea how much wire that took).
But nothing happened. At least, not at first. Then a torch fell past us on its way to the lava, and it a few minutes later that we realized something was up. With my brother at the controls, I suggested he climb back up and see what was going on. What we found surprised us.
The water was clumping, of all things - it was forming thick layers, and about halfway through the ocean, there was a gap - a gap in the water filled with breathable air. Apparently, Terraria was not designed to handle such vast amounts of water pouring at once... Either that, or we had fooled with the fabric of the universe to the point that it was splitting apart at the seams. Crossing the streams would likely be a blessing.
We traveled back downwards and discovered that the water had "frozen" in our long pathway - it wasn't moving at all, as if it had already found a place to rest. This all without any loss of framerate. We went back up to the ocean, worried and hoping we could find out what was going on, and hoping we could get our ocean back.
That was when everything froze for about half a minute, and when the game resumed, the ocean had simply disappeared.
The whole mass of water had teleported instantly to the underworld, where it was rapidly evaporating - except for the areas where we had put walls. For some reason, water seemed to not want to evaporate if inside of rooms. But the ocean was drained - and into the underworld. Afterwards we undertook the colossal task of refilling the ocean with a water generator, and decided it was probably not a good idea to re-empty it... though we left the mechanisms there, just the same, just in case we ever wanted to drown the underworld again.
But, I'm kind of wondering... has anyone else experienced this bizarre "water lag"?