When Dispensers use a stack of more than one Water Bottle (which can be achieved with the new max_stack_size component) to turn a block into Mud, the entire stack is turned into a single empty Glass Bottle.
Steps to reproduce
1. Run the following command: /give @s potion[minecraft:potion_contents=water,minecraft:max_stack_size=8] 8
2. Place the obtained water bottle stack into a dispenser, facing a dirt block.
3. Power the dispenser with a redstone signal.
4. Notice that the dispenser now contains a single empty bottle, rather than 7 water bottles and 1 empty bottle as expected
Can confirm.