Is a stage 2 cold air intake system where the pipes extend to the bottom of the car dangerous? Ive heard it could suck in water and completely ruin the engine. Or is it something to not worry about?

Yeah, its called hydrolock and it can happen. Its rare though: I've never actually heard of that happening, although I do know one person who had so much pater come up that it stalled his engine (didn't see to hurt it any, though). It you have to drive in the rain a lot I would not do it. Also, on Carburated cars you can get into problems with just too much water coming up into the intake that it saturates the air and the fuel won't atomize into the carb and down to the intake manifold. That too is rare.