I have tried pretty much everything from water, to alchol, to windsheild washer fluid to mixtures of all of them.
When using only water, I find that the paint comes out blotchy, and ends up with water marks, thus the drying time seems too slow, when you use straight alchol, I find the drying time too fast, and the paint can actually dry before it hits the model resulting in a rough paint finish (I said rough as oppose to a flat or matt finish) as well usually clogging up the airbrush, windsheild washer fluid has about the same properties of alchol, although it seems to have a wetting agent in it which will lengthen the drying time somewhat.
I have used these thinners for years and were somewhat happy with the results, trying different mixtures and such.
Then at the urging of my fellow modelling friends who apparenlty knew better than me, I splurged and bought some Tamiya thinner, and used it. Lets just say after the first time using it, I was completly sold on the Tamiya Thinner with Tamiya paints. The Paint thins and lays down on the model so much better than using the other stuff. When the paint dries, it doesn't have that rough textured finish to it, it has a perfect matt finish.
As car as thinning the paint, I am not sure what some of you are using for compressor pressure if you aren't thinning Tamiya paint, or only thinning it 5 -10%, but I am sure its way too high. Thin your Tamiya paints about 50/50, 50% paint to 50% thinner, if you use a dropper, or the old Mark 1 eyeball....however many drops of paint you put in, follow it with an equal number of drops of thinner, mix well, set your compressor to no more than 10lbs of pressure, and you will see a remarkable difference in your paint jobs. I know I did.