If you mean the water-and-compressed-air powered toy rockets, they generally work best when filled about halfway... but don't take my word for it, try different water levels and see!
You could use other non compressible liquids. You really are using the air trapped in the rocket as the energy source. The water compresses the air to very high levels and then is pushed back out the...
The force needed to lift a rocket is expressed as F=MA, or Force equals the product of Mass and Acceleration. Since the water being pushed out has more mass than the air would (i.e. is heavier than...