Paramount did it with the new Apocalypse Now set that came out last year. That's the last disc that I know of that used seamless branching, but there may have been others.
Waterworld's a fun movie and I'd love see the director's cut make it way to dvd, or HD-DVD.
I'm assuming that the bad history behind this film as well as the animosity between Reynolds and Costner is what has kept any kind of special edition/extended cut from being produced. It's a damn shame, because this film seems to have gained a cult following over the years and I always enjoy watching it when it's on cable... cult films always tend to be ones that have good repeat viewing value. I'd love to have the full uncensored extended cut on DVD just as I saw it on Encore several years ago.
Costner and Reynolds are now friends again. Reynolds was actually the guy who gave Costner the script for Mr. Brooks. So, maybe, that is a good thing that they reconciled.