That is what is in KY Jelly!
Yep same stuff that is in KY Jelly, or you can request it from behind the counter at the local pharmacy as pure glycerin.
Yes it is water soluable, and it does leave, it is only there to lubricate the insertion and the first few turns. After that the water does act as both a coolant and a lubricant on it's own. In our non scientific test the impellers last about twice as long if they are lubed when being put in. Seems most of the damage is the first few rotations. Never run them dry it kills the impellers really quick.
Vegetable oil can leave a gooey mess in my experience. The KY Jelly or Glycerin works wonders.
Another great use for glycerin is to add it to your soap bubble mixture for blowing bubbles. It makes the bubbles a lot bigger and they stay together longer.
( You do blow bubbles off the back of YOUR boat at anchor don't you?)
Guy