* Susquehanna River reaches record high in Wilkes-Barre
* River waters toxic mess after washing out sewage plants
* Pennsylvania, Virginia and Maryland struggle with floods (Adds details)
By Paul Eckert
WILKES-BARRE, Pa., Sept 9 (Reuters) - The Susquehanna River, swollen by rainfall from the remnants of Tropical Storm Lee, reached record levels in Pennsylvania on Friday and submerged some towns amid worry that flood waters had been turned toxic by swamped sewage processing plants.
Rainfall ended in the region from the powerful weather system that earlier drenched the U.S. Gulf Coast. But rising rivers and stressed dams and levees presented a stern challenge to Pennsylvania as well as Virginia and Maryland, states socked by flooding in late August after Hurricane Irene.
One Pennsylvania college town, Bloomsburg, was under water and closed to all but emergency workers.
The Susquehanna reached a record high of 42.6 feet (13 meters) in hard-hit Wilkes-Barre early on Friday but the levee system held in the northeastern Pennsylvania city, meteorologists said. The river topped the 40.9-foot (12.5 meters) level in flooding caused by Hurricane Agnes in 1972.
By later on Friday, Susquehanna had receded a bit to 41.4 feet (12.6 meters).
A levee system protected Wilkes-Barre but remained under heavy pressure and had sprung a few small leaks, Luzerne County engineer Jim Brozina said at a news conference.
"It is under extreme stress right now. I mean, we are well beyond our design for this system," Brozina said. "Every hour is a benefit to us as that river starts to recede."
Pennsylvania Governor Tom Corbett earlier told residents to steer clear of the river waters, which were turned into a toxic mess after flooding washed out 10 sewage processing plants.
VIRGINIA DECLARES EMERGENCY
Governor Bob McDonnell on Friday declared a state of emergency in Virginia due to the flooding.
At least five people earlier were killed in the flooding in Pennsylvania and Virginia and more than 130,000 people were evacuated on Thursday in Pennsylvania, New York and Maryland.
"This is a record flood in many areas, and people should expect the unexpected," said Joel Myers of Accuweather.com, who warned of potential sinkholes, flash floods, dams failing and bridges collapsing.
The most severely flooded were small towns without dikes along the Susquehanna River about 50 miles (80 km) north and south of Wilkes-Barre.
Dikes at Wilkes-Barre and Kingston, on the opposite side of the Susquehanna, were raised as much as 12 feet (3.7 meters) and fortified following the devastating flood caused by Hurricane Agnes.
National Guard troops went house to house in a search and rescue mission in West Pittston, a nearly submerged town without levees.
"My nightmare is the mud and the smell and the cleaning," said Annette Billings, who was evacuated to a shelter with her son Brandon and their dog from their ground-floor apartment in Luzerne, a Wilkes-Barre suburb.
Flood warnings were issued for Pennsylvania, New York, New Jersey and Massachusetts and flash flood watches remained in effect in Maryland, Virginia and the U.S. capital Washington, according to the National Weather Service.
As the Susquehanna slowly receded, in a Pennsylvania town along its banks called Forty Fort, caravans of dump trucks carried boulders to reinforce the vulnerable levees.
Police used bullhorns to chase onlookers from the levees, but in some areas along the edge of the flood zone, children rode bicycles and families strolled the river bank to inspect the churning waters. The sun shone brightly in a clear blue sky.
Two bison at the Hershey Park attraction in central Pennsylvania were among the flood casualties.
(Additional reporting by Dave Warner in Philadelphia and Daniel Lovering in Pittsburgh; Editing by Barbara Goldberg and Will Dunham)