A similar exploit was noted in another thread (Frost mage healing players), but the even MORE abusable thing I found is the ability to attack UNFLAGGED enemies and some friendly NPCs. It works great for one-shotting lowbies.
In short, you go Frost spec with your Water Elemental and create a focus macro for Frostbolt.
With NO focus set and not targetting anything, hitting this macro fires a Frostbolt at your Elemental, healing it./use [@focus] Frostbolt
With focus set on a FRIENDLY unit and not targetting anything, hitting this macro fires a Frostbolt at your focus, healing them.
And the best use, with focus set on an ENEMY unit (and some friendly NPCs) and not targetting anything, hitting this macro fires a Frostbolt at your focus, damaging them. They do NOT have to be flagged and occassionally you won't get flagged either. I tested this in Gadgetzan and the guards did not react at all (might be a quirk since I one-shot him).
Just make sure you aren't targetting anything, but instead casting via your focus and macro.