what begins to happen as the old people feel themselves growing young again? what catastrophe occurs? how does it occur?
As the older people that were willing to participate begin to grow young, they begin to indulge themselves in the pleasures and desires of youth. The Colonel begins to chase after and flirt with the widow, Mr. Gascoigne begins to blather on as a young and passionate politician might and Mr. Medbourne comes up with some incredibly silly plan to supply water to the tropics using whales and icebergs.
The overall problem is that they lose the wisdom they had gained over the years to chase after youthful passions or the ephemeral pleasures of youth. As they do so, they dance around the room and knock the pitcher of magical water off the table and spill it all.
That could of course be seen as a catastrophe or perhaps as a positive thing as it ends some of their ridiculous actions.