The directions i saw on youtube say to use tap water. what? i believe we're supposed to use distilled water. any comments on this?

Yes the direction say only use distilled or sterile water ( you can boil it yourself ) I do have my own well and a filter system so I feel confident with using my tap water with no problems. I believe that city treated water may irritate the nasal cavity or dry it out causing easier nose bleeds. I also think that some people might use unsanitary or unclean water if not told otherwise. So its probably also a smart legal thing ( and safe thing ) to say. There are some crazy people out there that might use stream or rain water. Ive seen crazier things LOL.

Is the handle hollow? Is water able to get trapped there?

The bottom half is hollow but not the top. No water cannot get trapped inside. It's great product and I've owned it many years. Enjoy to the max!

What Are The Health Benefits?

Clears out your sinuses to help with allergies or sinus infections. I kicked a sinus infection in 2 days by using this twice a day in conjunction with eating spicy soup!

Is this better than the plastic one? If yes, why?

The Himalayan Netti Pot is ceramic and therefore very smooth on the nose. Plastic usually is a bit more rough and can be a tad more rough on the nostrils in my experience.