My general practice is to drink around 0.5 to 1 liter of water if I arrive at a water source and I am thirsty. I simply drink until I feel totally quenched. Then I fill my bottles up with however much water I think I'll need for the next stretch of the hike (before the next water source).
I find that this 0.5 to 1 liter water consumption is just about right for me. It gets me to a point where I'm not thirsty anymore, but it's not so overkill that I feel sick to my stomach afterwards and immediately pee it out.
Everyone is going to have their own preferences, of course, but it sounds like my own practice isn't so far out of line with many other out there.

