Yes. The advantage is that you can make the surface area of the air cooling part much, much larger. I had a water cooled system that could do web browsing and other basic tasks with zero fan speed (though it was better to leave it on very low speed to avoid hunting behavior).

Also, there's some benefits to thermal mass. Short term spikes can be absorbed by the water without increasing fan speed.

Every liquid cooling system is pretty much that. Eventually you need to give it to the outside and the outside is usually air. Heck even river cooling for Power plants ends up "air cooling" through the rivers surface.

I think that the point is to get a much bigger radiator by moving it to a less cramped location. The point is to make the process more efficient, not to change its nature.