Why does diluted half & half not make a substitute for whole milk?
The difference between whole milk (or any milk, really) and half-and-half is one of fat content, not overall concentration. Half-and-half gets its name from being a 50/50 blend of milk and cream, which normally separate because the less dense fats concentrated in cream float naturally to the top of the mostly-water milk. However, milk also contains a number of other proteins, sugars, etc. that give it flavor. When you dilute half-and-half with plain water, you're diluting the fat content (potentially down to a similar range as contained in whole milk) but you're also diluting all those other flavorful components. You wind up with something that has the right fat level but not enough of anything else, and which tastes somewhat flat and flabby by comparison with proper milk.