A great cheap rack is the Bontrager BackRack Deluxe which has a second set of lower tubes to lower the panniers... it's basically a knockoff of the Tubus design, for 1/4 the price (part of that price difference being aluminum vs. stainless steel). Surly makes a nice rack too, as does Axiom and a few others.
Aside from bottle mounts, a rack is the best way to carry extra water. In the mean time, you could always consider a camelbak. You can also get handlebar mounted water cages, or cages that attach to front fork mounts, throw a bottle in a jersey pocket, etc. You have a LHT so you already got three bottle cages, right? You can carry larger bottles.
If budget is an issue, it's not hard to make a workable pannier from cheap scrap. I have a couple of perfectly sized bags with a hard back that I bought at goodwill for $5 each... a bungee cord and a couple of hooks later, I have two workable panniers for city commuting (I use my more expensive fully waterproof ortlieb's for actual touring).