The NEC specifies the required clear space for access to electrical panels. Those specifications will certainly apply to new construction. Generally residences will require 3' of clear distance from the front of the panel and 6 1/2 feet of vertical distance. I interpret these spaces as being for people to be able to work on the equipment. Clearance to the sides for other equipment require that any covers or doors be able to be opened at least 90 deg. Exceptions are listed for some existing installations. Inspectors sometimes present their personal preferences as being required-- and as a practical matter, one might be well advised to comply.

My lower drain has a special two channel device to allow the heat pump to transfer heat into the water heater, especially nice when in the air conditioning mode as this is then throw away heat. This makes the channels smaller than the 1/2" pipe thread hole...they have become plugged before, and I have replaced the HW tank once about 8 years ago. I do not plan to replace the tank at his point, it is a glass lined upper end GE 12 year tank, and I am planning to move the heat pump tap to the cold in and hot out at the top of the tank, this should allow my heat pump to draw water from the cold dip tub, and push hot water back into the top of the tank. As this will be done with a full 1/2" "T", I think it will not have the same problems I have experienced with the crowded double use of the drain hole for the same purpose. That said, I have to remove the tap in the bottom of the tank and I don't want it to suddenly let go and dump 50 gallons of water in my basement. My plan is to return the lower drain hole to drain only.

I don't know what unit takes 3 -40a circuits or any costing several thousand dollars.Mine is rated at 120a, has two 60a breakers in the house subpanel, and two sets of four ganged 40a breakers in a separate subpanel for the unit. This is a single-family house, 3BR, 2 full baths, 2 half baths (one is in the garage). The house was built 4 years ago by a developer, I don't know what the tankless cost. I vaguely recall that sales literature I saw later for the unit involved indicated $1,025 retail. I've seen it run at full-capacity only during cold-snaps of near/below freezing temps that lasted a couple days which dropped the incoming water temp (well-water) pretty low, when I raised the set-point to 140°F for a specific hot-water task. Typically it runs as little as 7% of capacity to 66% or 70% ... but of course still needs a 120a circuit.

I agree with nigelsgarden that the recirc should work. Did you run a new line back to the hot water heater and feed the recirculated water back into the cold water inlet fitting on the heater? There are easy to install recirc pumps which use the cold water feed to the bath room as the return pipe. The problem here is that with the recirc pump running you won't have any cold water, because the cold water pipe will get packed full of hot water. Mark, if you saw anything discouraging feeding the mini hot tank with the hot water line it would have been to avoid the following situation": 1-You start showering, and the tank gives you nice hot water right away. 2-The nice hot water you use from the tank is replaced by the cold water in the 50 feet of pipe from the hot water heater to the bathroom. 3-As the limited supply of hot water in the mini hot tank starts to become exhausted, the shower will begin to cool down, because the cold purge water is filling the mini hot tank. 4-The shower probably won't go completely cold, because when the pipe purge is done, there will be hot water from the big hot water heater filling the mini hot tank, and the outlet temperature will rise again, until the temp at the shower equals the output form the main hot water heater. If you like to sing in the shower, the cold phase might give your voice a nice operatic vibrato (caused by shivvering) and the arrival of the very hot water can help you with a couple of high notes till you get everything regulated.