It certainly depends on the state and what the WWTP design looks like. From my experience, true direct potable reuse projects (known as toilet to tap) essentially use the WWTP effluent as the source water for the DPR plant. The onus will be on the DPR plant to be designed for worse-case water quality scenarios - typically what the discharge permit allows.

The key factor in these DPR projects is being able to achieve pathogen inactivation credits to drinking water standards. We’re talking upwards of 12-log depending on the state regulators. So these plants typically use low pressure and high pressure membranes and advanced oxidation treatment. UV as well.

And I completely agree with you regarding water loss in distribution. Finding alternative source waters for drinking water is admirable, but when 20-30% of your TREATED water is lost to the pipe gods, then it deserves the same consideration.