Place the water and sugar in a large sauce pan and, using a thermometer, heat the mixture to 121 degrees F. Let the mixture cool to 95 degrees F., then using an electric mixture, whip the egg whites into fluffy peaks. Add the liquid sugar to the egg whites in a slow, steady stream. Add the butter and cream cheese in small chunks. Whip the mixture into a smooth, creamy consistency. Frost the cake between the layers and assemble. Frost the outside of the cake. Coat the outside of the cake with chopped pistachios.
