I had the same problem with my Trek 7.4 with 17.5" frame. Evidently Trek does not think that riders with short legs have the same hydration requirements with as those with long legs

. There was room for two bottle cages but they decided on one mount instead. What I did was drill and install rivnuts on the seat tube and relocate the down tube water bottle slightly higher on the tube using the same rivnuts. I figure if the manufacturer can drill holes why can't I? Yes if the frame has an issue in the place where the holes are drilled I suppose you would be SOL. If the frame fails at a weld or any other place I would not see it as being in issue, If it is they are just looking for excuses not to warranty their defective product. These are what I used
http://www.amazon.com/Flat-Aluminum-...uminum+rivnuts