Yes it would be 4.5% more dense than water. The hydrometer measures specific gravity, which is a ratio of the density of a substance (wort) to the density of distilled water. Tap water however contains other substances (like calcium etc) that make it more dense than distilled water
obviously everyone tap water is different, so it is easier to say that they read 1.000 on distilled. Some taps waters may do the same thing but Union, if you havn't already I would test it on distilled if you ever feel like it.
Personally, I don't care if mine is off a bit. It is the difference I care about so it will not effect my ABV calculations
I'll have to try that one the next time I pick up a gallon of distilled to make more star-san solution. It's worth a look. But,it's always been said as "water @ 60F",never said what kind. But worth a shot in the interest of science...