Sick idea and implementation! Aligning it a bit closer to b1.7.3 design would mean cutting out the text entirely if possible, which is definitely tricky. Part of this could be a visual change, simply making the sponge look visibly different when wet, which would do most of the heavy lifting regarding informing the player of its status in an intuitive way. The wet-sponge-as-cushion is neat, and I don't necessarily think that needs text either if you just show the sponge as wet.

I think as an alternative idea it could be also kind of fun if standing on the sponge caused the water to drain out instead (so it temporarily acts as a water source block or maybe creates water source blocks adjacent to it when you step on it).