if you're the sort of car owner who keeps a vehicle until the wheels falls off and you're willing to accept some risk, it could be a good way to get a discount. I've definitely considered cars with a mark on the title, but it was for minor accidents, not anything related to water. I personally wouldn't do it. If you ever try to sell the car, it would be a real headache. I think it's also kind of nervy of them to sell you an additional warranty rather than simply include it. If they were confident the car never saw water, I feel like they would keep the original warranty term. You're looking at a car that is so reliant on electronics and would be costly to repair outside of warranty, that I personally wouldn't take the risk. If this were a 4Runner? sure by all means go for it. I think the equivalent risk for ICE is closer to an out of warranty, late model BMW M5 that may have seen water. Not the old analog M5's that are a mechanics dream, but the new electronic-everything M5's that plummet in value.
If you want a Model3 around that price, I would check out an SR+ in inventory right now. They've been popping up a lot lately especially outside of CA and if you're willing to travel a bit you could probably snag one before year end and still get the tax credit. I'd take a full warranty new SR+ over the LR you described in a second!