When Jet had Katara and Aang use waterbending to get the water that was unsuccessfully attempting to come out of the steam geysers, the water kept coming out and filling the river that went into the reservoir. I know eventually that the water would have stopped, but this leaves me with 2 questions:
1. Since the geysers' water wouldn't stop coming (at the time) after the pressure was released with bending, wouldn't the dam have eventually been completely filled and started to flood the town anyway by going over the dam's top, even if the dam wasn't blown up and the citizens would have been able to evacuate, since the water most likely would have slowly gone over the top?
2. How soon could the town Gaipan rebuild itself, since the geysers' water was still coming into the river and its reservoir, most likely for quite a while?
If the water were simply going over the top, any flooding that would occur would probably be very slow, hardly the destructive torrent of water we see in the episode. The people would probably just end up digging ditches to reroute any excess water, if that would even be necessary.
As for rebuilding, I would say not long after the villagers found another upland site to build on. There seemed to be a good number of villagers to get the job done, and I doubt the Fire Nation would prefer to lord over villagers with proper establishments. It could also be they were simply taken to another Fire Nation controlled town.
I did say that the possible flooding would be very slow and that the citizens would have been able to easily evacuate, but I would think that the geysers' water would need more than ditches to reroute any excess water, at least for a while, until all that geyser water stopped coming out and going over the dam (which I think would take some time).
Unless the original path of the river went through the town itself, I doubt the excess flow would cause enough trouble to warrant evacuation if its coming out slowly. A few choice levees or ditches would probably do the trick.