Lyle MacDonald does indeed touch upon this topic (I feel better knowing I'm not crazy!):
"Many people have noted that fat loss is often discontinuous, that is it often happens in stops and starts. So you’ll be dieting and dieting and doing everything correctly with nothing to show for it. Then, boom, almost overnight, you drop 4 pounds and look leaner.
What’s going on? Back during my college days, one of my professors threw out the idea that after fat cells had been emptied of stored triglyceride, they would temporarily refill with water (glycerol attracts water, which might be part of the mechanism). So there would be no immediate change in size, body weight or appearance. Then, after some time frame, the water would get dropped, the fat cells would shrink. A weird way of looking at it might be that the fat loss suddenly becomes ‘apparent’. That is, the fat was emptied and burned off days or weeks ago but until the water is dropped, nothing appears to have happened.
For nearly 20 years I looked for research to support this, I was never sure if it was based on something from the 50’s or he just pulled it out of thin air as an explanation. Recently, one paper did suggest that visceral fat can fill up with water after massive weight loss but that’s about it.
Somewhat circumstantially, people using Bioimpedance body fat scales (which use hydration to estimate body fat levels) have noted that body fat appears to go up right before a big drop. This implicates water balance as the issue here."
(taken from http://www.bodyrecomposition.com/fat-lo ... y-fat.html)