To interpret a spell named Water Breathing as literally as to mean it allows you to breath water makes about as much sense as saying a spell called Stoneskin turns your skin to stone. And thus subjects it to Stone Shape or Transmute Stone to Mud.
Based on the text of the spell, there is no mechanical reason to believe it must involve water going into the lungs. In addition, there are significant mechanical reasons against such an interpretation - as mentioned before, that would mean that when the spell expires on dry land, you are left with a lung full of water and risk dry drowning. I sincerely doubt the designers intended for this to happen.
But maybe I'm biased. Can anyone tell me a good reason to have water breathing let water into your lungs and therefore drown you when it is dispelled or expires, mechanical or otherwise?