Aging water treatment plants in developing countries often operate beyond their design capacities, potentially compromising operational efficiency and water quality even when regulatory standards are met. This study evaluates the impact of a comprehensive modernization program (2012–2019) at the El-Galaa Water Treatment Plant in the Nile Delta, Egypt, serving approximately 180,000 inhabitants. Thirty-one paired raw and treated water samples were analyzed for key physicochemical parameters; and treatment performance was assessed using the Weighted Arithmetic Water Quality Index (WAWQI). Prior to modernization, treated water exhibited a paradoxical pattern: although all individual parameters complied with regulatory limits, the integrated WQI classification indicated poor water quality (66.1 ± 19.4), largely driven by excessive alum dosing (>60 mg/L), which increased total dissolved solids and hardness. Infrastructure upgrades targeting clarification efficiency, hydraulic performance, and filtration were implemented alongside a 150% capacity expansion. Following modernization, turbidity decreased by 70.8% (0.72 ± 0.23 to 0.21 ± 0.08 NTU), and optimized alum dosing (~35 mg/L) reduced chemical consumption while improving integrated water quality. Consequently, the WQI classification of treated water improved from Poor to Excellent (22.7 ± 6.2). The findings highlight how integrated water quality metrics can reveal treatment inefficiencies that remain hidden under compliance-based monitoring and demonstrate the benefits of targeted modernization strategies for aging treatment plants.