The best method of controling thee space is to close it off from the outside elements and dehumidify the space. In an existing home the conditions for mold may be present and it would be of your best interest to have a professional look for visible signs of current mold growth. If the conditions are apparent, then the space would need to be remediate properly, by removing all floor insulation, removing the mold, and treating for re-growth. I own a professional crawlspace company, please feel free to visit our web site for questions, or you may contact us to see if we have a dealer near you. www.moldfreecrawlspaces.com

By IRC code definition, a conditioned space is a "space within a building that is provided with heating and/or cooling equipment systems capable of maintaining, through design or heat loss/gain, 50F during the heating season and 85F during the cooling season, OR communicates directly with a conditioned space. For mechanical purposes, an area, room or space being heated or cooled by any equipment or appliance." What this means is that you can add any type of heat to the under space and condtioning it. Doesn't have to forced air at all. It can be steam pipes that radiate enough heat to maintain and heating season temp of 50F or above...A strip of electric heat, radiant baseboard or any other means. Likewise, the space can be conditioned in summer by running AC to it. Likewise, the space is considered condtioned if it opens to another portion of the basement that is already heated and cooled by design or default. Likewise, the space is considered conditioned if it simply naturally falls between the 50 to 85 range at all times...even without mechanical means. The key to #5 above is that you cover the floor with a vapor retarder....insulate the walls from the top of the rim joist to a point at least 2 feet below the frost depth...and then to condition the space by design or default.

How much noise should we expect from a HPWH? - About as much as a fridge What downsides, if any would we experience with a HPWH vented to the conditioned crawlspace? This can work - but know that the air going into the crawl space has to return back to the water heater on the main floor. You have to provide some way for that to happen (a vent, openings, etc) One reason I was initially attracted to a HPWH in the pantry is the cooler/dryer conditions that would result in that space. is that a foolhardy approach? No, it's not. It's fine. Again that air being sent to the crawl space has to circulate back to the water heater. It will cool and dehumidify that area. Also a slightly unrelated question: we have to other hot water "zones" which are ~ 23 ft from the proposed water heater location. Is there a general rule of thumb regarding distance from the heater where electric demand water heater becomes preferred? The answer is complicated. What is the fixture being served, how sensitive is the use to delay in getting hot water? Also, plumbing layout and design matters. So, for example, let's say that one of the uses is the master bath sink. You use the bathroom and wash your hands - you will notice a delay. The fixture will use 1.5 gpm - if you use home run system and use smaller pipe, you will get hot water much faster than if you use a branch system with 3/4" lines. Insulating hot water lines keeps the water warmer between uses also. On the other hand a bath tub, for example, probably doesn't matter. It's moving a lot of water (4 or more GPM) and nobody really cares if it takes a few seconds to get there.

Wise questions and encourage you to carve out the proper space for the HPWH. Most experts are not going to be ok with the pantry-door-open approach though it would probably perform fine if you actually left it open all the time. For noise, expect something like loud fridge. Plenty loud for most people to keep the pantry door closed, which could lead to problems. Yes, air in a room will be cooler and drier with HPWH, the smaller the more noticeable. I think AirTap's model is the only one that can be ducted at this time and don't know anything else about that brand. A smaller closet could work with homework and good HVAC craftsmanship. Conditioned crawlspaces and basements are ideal locations for HPWH. I feel if topography is suitable for a crawlspace, then you are approaching headroom necessary for HPWH. You could maybe dig an extra couple feet to create a pit for the appliance but would ensure the depression has adequate daylight drainage provisions. The extra cost of this work could be balanced by skipping the dehumidification needed for most basements and crawlspaces but it still might not be enough to totally eliminate conditioning needs. Electric demand water heaters can make sense in some situations but I don't think 23' is going to warrant them. You might be better off finding a plumber well versed in smart distribution design. I think homeruns (and close-to) of 3/8" or 1/2" tubing would be better in most situations. For those still in design stage, consider making small plumbing footprints a top priority.