A properly built cistern is sealed....no mosquitos. Only health problems would be if the filter system failed.. Odd that KA has banned them.....well, maybe not so odd seeing as how its kalifornia!
It just seems to make sense that most water should be used twice before treatment....brush your teeth, cook food, ice from 'first' series, water the lawn, wash the cars from the second. Oh well. If somebody actually started building a cistern they would probably irritate the ground worms...and we can't have that!