Can I add a little water to the patch plaster to thin it out?

Yes, you can add a bit of water to thin this out. It will take a bit longer to set up and dry though so you need to plan extra drying time. In doing what you want to do though, you may need to use more than one coat as it may shrink some while drying since you are thinning it down. Cracks may show on any heavily damaged area, but again, add another coat and it should be ok.

DAP® Patching Plaster can not be thinned in order to achieve a "pourable" consistency.