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ArcGIS 10.1 will include Geoprocessing Geometric Network operations. If you have access to the beta/pre-release, I would look at these tools. Another thought is to look at the Isolation trace tools included with the Infrastructure Editing Template. The isolation trace tool finds all the valves required to shut down service to a main, and selects all affected assets. There is a version of this tool that runs through each pipe in your systems and runs the trace. You could use these as a base for your own tool. This will require C# programming though.
Thanks for your suggestions, I will try to get my hands on a pre-release of 10.1 and see if that does what I need.