What brand/model is the water heater? Tank? How large?
Yes, your fire looks funny. Do you have a CO/CO2 detector in the house?
In a conventional WH, the thermocouple simply acts to keep the pilot light burning. If the pilot gets extinguished, the heat to the TC is eliminated, the TC stops making its little bit of current and the gas valve shuts. This prevents the pilot light gas from remaining on and blowing up your house when the gas leak reaches an ignition source.
If it's a tankless, then the TC may have additional functions.
What is a drip pipe? Do you mean drip leg on the gas supply that keeps sediment out of your gas valve? Or do you mean the dip tube which carries cold water to the bottom of your water heater from the water supply?
Given your symptoms, I can almost guarantee it's your DIP tube. Your flame still looks funny.