Yes grey water and black water can be dumped safely without going into a commercial waste system. Now I'm not saying dump it on the ground!!! Everyone should read "Deep Design: Pathways To A Livable Future By David Wann" where in chapter 7 he discuses PAWS Inc sewer system in detail. They basically use wetlands to filter their waste water. Obviously it is done in a very controlled manner with the approval of the EPA and the State if Indiana.
You can read a summary here:
http://www.utne.com/community/sewagesalvation.aspx#ixzz36trwbQal