You hear many accounts, Biblical and otherwise, of people drinking wine for hydration.

You also have many accounts of people drinking water for hydration, with writers both Classical and Medieval having various rankings of water based on its source. I commend to your attention my main post on the Water Myth.

My most recent favourite quote re water is from Aelfric's Colloquy:

Teacher: What did you have to drink?

Boy: I drink ale, usually, if I drink at all, and water if I have no ale.

Teacher: Don’t you drink wine?

Boy: No, I am not rich enough to be able to buy myself wine: Wine is not a drink for boys or fools but for old men and wise men.

Which is just one of many other possible quotations from other works in this vein...

Germ theory did not exist, but what stopped people from realizing boiled was ok to drink?

Absolutely nothing. Multiple authors in fact recommend boiling questionable water. Hildegard of Bingen, for instance, recommends boiling river and swamp water before drinking. A letter going around the University of Toulouse in 1315, ostensibly from a father to his sons studying there, warns them to boil the town's well water and water taken from the River Garonne before drinking.