Dolly:
What you are likely seeing in your tap water is slightly different from what is seen in this stream. I grew up in central Indiana. We were on a well, bored into the glacial till that covers most of the northern 2/3 of the state. Our water, untreated, was very hard, no idea what the pH was, but also full of iron.
In water, including groundwater, iron can be
reduced (when the oxygen is low) or
oxidized (when oxygen is relatively high). The oxygen level that governs which
redox state the iron will occur in is low compared to what most aquatic animals will need (often 4 ppm dissolved oxygen or higher). Reduced iron (soluble, relatively low color) in groundwater will convert to oxidized iron (insoluble, red brown) at dissolved oxygen levels of 1 to 2 ppm or higher.
Your water, especially if it comes from a well, probably has reduced (dissolved) iron in it. Aerating it by running it through a treatment system, faucet aerator, etc. increases the dissolved oxygen level. It precipitates iron oxide on your plumbing, yellows the laundry, etc. The iron level causes staining, but is not dangerous to drink.
There is bacteria associated with that red acid mine drainage. Read about
Thiobacillus ferrooxidans here:
Thiobacillus ferrooxidans Note that it is associated with conversion of reduced to oxidized iron, and the bacteria derives energy from that process.
For more on groundwater iron and redox, see
http://www.oregon.gov/oha/PH/HEALTHY...roundwater.pdf
For more general information on redox, see
Redox - Wikipedia