First of all Waterbending is the balance between push and the pull. Without one, the other is useless. It would be like using a scale without a counterbalance. By killing one of the spirits Admiral Zhao was able to break the balance and therefore negate all waterbending. However it is wierd that later encounters with waterbenders particularly the Foggy Swamp Tribe did not mention "The Night of Blood Moon." Waterbending goes with many beliefs in that for GOOD to exist so must EVIL etc. It would have been interesting if the night that Old Man Ding escaped Hama's control was the vary same night as it is shown to be a full moon and Hama was known to use Bloodbending on the full moon to capture the local villagers.