I would definitely recommend diluting it, as it could be too acidic otherwise. As far as I know, there's nothing wrong with adding distilled water to the vinegar. However, if you don't want to risk contaminating the vinegar, just distill individual portions right before adding them to a recipe.
Of course, the easiest thing may be to just use half the amount of vinegar for any recipe.
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Of course, the easiest thing may be to just use half the amount of vinegar for any recipe.