As a Brazilian and personally against the idea of accepting hosting these games, I can say that things will be fine, just as the WC was. It's really not a big deal to make it work.
The traffic will be ok. They moved the school vacations to August, so the movement drops drastically and things will work. Security will also be a no issue because the national guard and the army are providing security, so the city will be relatively calm. The security issues are more in the downtown area and north region of the city. Tourists will stay at the south area and maybe at Barra, both regions are reasonably safe and will be heavily watched by the army. I'm not saying that Rio IS safe, because it isn't. I don't live at Rio because I personally don't like it, but I live at a nearby city and work/study there. But with the extra protection, things will be way safer until the games are over.
You also seems to not understand how Zika works. It's gone now. Like Dengue, it's transmitted by a mosquito, so it only spreads on the summer. We are on winter, so it's just gone.
The water is indeed a problem. Guanabara bay is heavily polluted because most sewage from Rio isn't treated. For tourists, this a no issue, because the beaches in the bay are Flamengo, Botafogo and other that people simply won't go to swim. Copacabana and Ipanema are not located at the bay, they are in the ocean, so they are clean. The swimming competition will be here. I don't know why the boat competition will be at the Bay, really. They could do it at the oceanic beaches or simply move this to Barra. They could also do it outside of Rio, in any city of the Lakes region (it's just a name, there are no "lakes", just clean beaches), they are just 2 hours from Rio.
While Rio has a lot of problems, it's not that hard to hide them or use short term solutions to avoid them for less than a month. Just pour a ton of public money and allow some unrealistic usage of government resources and things can work for 30 days.
But seeing the games happening here, I actually wonder why anyone would want to host this or a WC. It's a big, massive expensive party. Ok, you get a lot of tourist pouring cash in you local economy, but the budgest for this event exceeds this income by far. Olympic legacy? A bunch of installations destined to sports that are not popular here and will just be abandoned by lack of use. I do really hope that Brazil don't try to host anything like that again, but in some decades people will forget this stuff and it will happen all over again.