Simplify, and pack it in a box.
This is why it's 'Launcher in-a-box' - here is the whole water rocket kit:
And when assembled ready to use it is like this:
The launcher uses bungy cord pulling the hose fitting open, with a hinge preventing this from occurring. When the string pulls the hinge it collapses allowing the bungy to pull the hose fitting and release the rocket.
Irrigation rises are used for the launch tube. Brass tube soldered to the hose fittings hold this tube, allowing it to be changed (for different size rockets) - worked in theory, but in practice the tube came out on launch.
Details of the release, hose fittings, and launch tube holder:
We recently (January 2008) moved from NZ to Australia. This launcher was given away during the pack-up.