I'm actually fully in favor of allowing buckets for water, milk, and lava - both picking up and placing. I've actually manage to craft a bucket in the first map, and pulled some lava from the open lava pit on the island. Unfortunately, the lava vanishes immediately when placed (I've only had enough spare iron to do this once, so I'm not sure if you do get damage/burning if you place it directly on a player before it disappears).
It would add a very interesting twist to combat allowing a fleeing player to suddenly drop lava behind them, or do some area-denial strategy during a deathmatch. Since lava burning damage ignores armor, it would be a bit of a balancing factor in a fight. Plus, it is quite difficult to get enough iron generally for just the sword, so burning a bit on a bucket and then having to collect lava or water would add to the risk.
Other fun ideas for traps/uses include setting up a waterfall on a tall vineless building, then fleeing up it after sighting a player. When you get to the top, remove the water block, and escape. It would also make some large building descents safer. One thing I tend to do is trap people in the pink house on map 2, if they reach it before me. A lava block at the top of the ladder would be an interesting kill method (even though ladders do block lava progression, so it wouldn't fill the room). The slowdown/pushback of water bucket uses could also be used for escape or essentially a combat movement debuff by obstructing paths.
But, even though there are many fun new strategies the buckets would add, there are some serious issues for the server. (1) Large areas of burnable material (wool, wood planks, etc) that might uncover areas not designed to be explored. (2) If the ghosting/server reset issue is resolved with a map that just changes teleport locations back to lobby and doesn't do a full reset, burned areas would be still burned, potentially causing issues. (3) Large scale fire lags servers quite badly. The forests in map 1 are sufficiently sparse to limit spread of fire, but in map 2, the large forest to the south, and the forest near the gas station to the northwest would carry fire completely across them, and thus the burning would be a massive griefing tool (I believe this is also an issue with getting flint/steel to be used in the game). It would still take some effort to gather the materials to do the griefing, but there are bound to be a few griefers dedicated enough to try it. (4) The infinite water generation trick. This would be a bit trickier to manage without being able to dig a 3x1 water generator, though I guess you could find natural pits to do it in. I don't think this would create terribly much lag (I've covered parts of maps on my own servers with water in this way, and not much difference in performance was observed), and the water does have a limited horizontal spread, so it would take some dedication to make any large scale map changes with infinite water.
The milk use for food would be interesting, and I am frequently getting sick from raw chicken (I generally give it all to any partner I end up with just to save the hassle of losing hunger).
[Edit] I completely forgot about the cooking use and addressing that. I'm not sure how useful it would be for lava cooking, as you lose the bucket, and I've never had more than like 10 items of raw food at any given time (and when I get enough loot to have that much, I generally end up with like 30-40 sticks or saplings anyway, so it seems like a bit of a waste to cook like 3-4 pieces of food and lose 3 iron. You are free to do as you like, and you actually can cook with lava buckets at the moment anyway (since it doesn't involve placing blocks), so have at it. [/Edit]
Anyway, that is just my 2 cents. Definitely something for the devs to consider in the future, but with the griefing potential, it might make their jobs harder than they need to be.
