Yes the flames are hot enough to split the oxygen and hydrogen in water making an explosive mix.

This animation is from Mag Flint Firestarters, its not very clear, but it shows somebody scraping the megnesium, lighting with the fire steel and scrape the pile together then drop a drop of water from the end of their finger onto the flames.
www.magflintfirestarter.com/magburn.html

Its not very clear, but I remenbered it because I have a couple of these firestarters.