When you remove the nut, not much water will come in....maybe not more than now, but when you remove the three packings, that's when the water starts. In my experience, if you have someone to help with a big sponge to remove the water, and you are all well prepared with your new packing pieces, it shouldn't be too bad.
I don't use any grease or paste, just teflon impregnated 8mm packing cut just a millimeter or two, too long, so it will fit tightly.
The way it works is that the nut compresses the three layers of packing, pushing it against the gland housing and the rudder shaft. It is important that the cuts in each layer are not aligned, if they are, and/or your packing is not a tight fit, the gland will be more prone to leak.
All the best