Mason jar stuck inside another
Ok, first you had me wondering "How did he get the small jar inside?", but having kids I quickly realized this is a futile question. (For those w/o children, read Douglas Adams...)

The standard procedure for detaching two jars / glasses that are stuck, would be putting ice cubes in the inner one and then placing the outer one in hot water. But you said you can't open the inner one which is full of water? 

Well, ice is frozen water. So freeze the entire contraption until you have one large ice cube in the inner jar. Proceed as usual.

Your inner jar might break due to expanding ice or the outer due to thermal shock, but currently you have two unusuable jars, after this, you might have at least one good one...