I remember reading Air Clues in the 60's or 70's of an accident to an RAF aircraft and the explanation concluded something about lots of water on the windscreen and it causing an apparent error in what the pilot saw due to refraction in the different substances, water and glass. Perhaps the Thunderbird accident had a similar root cause but not identified?
On the F-16 water pooling in front of the HUD does not really cause refraction in the way you describe. what it does is totally restrict forward visibility i.e. everything gets blurred to the point that you can not distinguish the runway from the surroundings.
I have not read to the report, but is the speed quoted IAS or groundspeed?
The speed was IAS.