I just had the O-ring fail on the water housing on my '03 4.7. I had the same thing. At first it was a dried splotch of coolant, then a constant leak when the O-ring let go. Do not let Toyota fix it for you. I was quoted over $500 dollars to do the job. I went to parts, and was able to get the o-ring, the approved toyota sealant, thermostat, and a gallon of coolant for $80. The job took 15 minutes to complete, then I let the housing sit for two hours so that the sealant could cure. Super easy repair.