I am actually a water treatment contractor in So CA. Don't sell or install tankless heaters, but have over 6 years of experience working closely with them. My 1st choice would be the Takagi TK-3OS. The Noritz N-0751M-OD or the Rinnai R75LSe would also work well for you...
I am a firm believer of the tankless water heaters...make sure to use an experienced installer...any problems associated with tankless water heaters are usually related to an inexperienced installer...and don't forget your $300.00 energy rebate.

tanklesswaterguy (your choice of name)
Registered today, know all the models, give good advice on install, and are aware of the Fed tax credit, even though you said rebate. But you are a water treatment guy?

Hhhmmmmmm????

Tankless water heaters are great for filling large bathtubs and jacuzzis. I definitely recommend one for your application, and unless your house has a really spread out floor plan, use it as your whole house water heater. I live in Nor Cal (pacifica) where the climate and incoming water temp is up to 10 degrees colder. I have a Bosch Aquastar 250 NG, which is about the worst tankless water heater on the market. I use it for whole house water heating of a 2 bath 1200 sf home and a 300 gallon hot tub. I have gotten 4 years service, with no part replacements. But I did install the thing wrong at first and had some problems. The installation of these units is really important! No short cuts. After installing it right, I had no more problems.

This is encouraging. Appreciate your replies.

I have seen a significant number of posts claiming tankless water heaters don't play well with thermostatic or pressure balanced valves...have you experienced this (my guess is no.) Is this an issue or a red-herring?

A second negative I have seen is the minimum flow rate required to activate the tankless units. I was planning on keeping the tanked unit to supply to all sinks.

Second reason for keeping the tanked is that running three showers simultaneously will close to max out units the size of Rinnai R75 or the Takagi TK-3, not to mention filling (what for us is) a monster tub.

Third reason for keeping the tanked is that for the applications I have in mind, the cold water sandwich effect should not be an issue since there will normally be no on/off of the hot water; it will pretty much run contineously while needed, then turned off.

Should I be re-thinking this?

I would look a 80 gallon Voyger heater. This is also sold by Rheem. This is sealed combustion, plastic vent, 250,000 btu, I installed this when I have a large dump load and need fast recovery.

John,

Issues with shower valves tend to be that with pressure balanced, some heaters with high pressure drops result in significant pressure differences at the valves (lower hot side) causing the spools to search for setting to maintain even pressures.

Thermostatic valves work well, and many issues are when people raise the outlet temps higher than needed, resulting in excessive temp differences between hot and cold, but also adding to pressure differences since the heater regulates flow to achieve correct temp outlet.

Since Legionellas isn't much of a part here because of minimal storage in a tankless and the waterways are self-flushed every time it is used, lower temp settings helps this along with assisting lower flow rates/temp to activate unit and keep it running.

My .4 GPM unit has no issues activating at all faucets. Regarding your 3-shower comment, do you really have 3 showers running that often? The way these work (good ones) is they will supply a water flow at or very near the setpoint chosen, so instead of running out of hot water or someone not getting temp desired, the flow will be split, resulting in all 3 showers getting less volume, not temp (with thermostatic valves).

Just as a tub filler would work, instead of filling the tub at 13 GPM, it may fill at 8 GPM (mixed water) resulting in a slightly longer fill time. Who cant wait a few more minutes for a bath? Upside is anyone else in the house still has hot water after filling tub, unlike a tank unit.