In fact, I think young whiskies should not be sold at cask strength. The additional water does seem to provide the requisite balance.
Wow! We have very different opinions then!
When I think of all the really young whiskies I've enjoyed (e.g. 7 years or younger) they've all been cask-strength.
Even the 8 to 10 year old whiskies I've really liked were all cask-strength, although I should probably clarify that statement by saying that they've all been SMWS bottlings, and it would be fair to say that those young casks were picked by a pretty discerning tasting panel.