Time-dependent and time-independent quantum scattering methods are used to investigate state-to-state inelastic and reactive collision dynamics for a three-dimensional (3D) atom+triatom model of Cl+H2O-HCl+OH. The results elucidate the role of (i) intramolecular vibrational energy transfer and (ii) vibrational nonadiabaticity on the time scale of a reactive encounter in systems with nearly degenerate stretching "local modes." Adiabatic two-dimensional (2D) vibrational eigenfunctions [psi(n)(r(1),r(2),R)] and eigenvalues [E-n(R)] are first obtained in OH bond coordinates (r(1),r(2)) as a function of Cl-H2O center-of-mass separation (R), which then provides the requisite adiabatic potential energy curves and nonadiabatic coupling matrix elements for full 3D quantum wave packet propagation. Inspection of these 2D vibrational eigenfunctions indicates that near degeneracy between H2O symmetric \01(+)] and antisymmetric \01(-)] states is systematically lifted as R decreases. causing vibrational energy to flow into local-mode OH excitations pointing either toward ("proximal") or away from ("distal") the approaching Cl atom, respectively. This suggests a simple yet powerful physical model for mode-specific reactive scattering dynamics, the predictions of which are confirmed by full 3D quantum wave packet calculations over a range of collision velocities.