"The breaker protects the appliances on the circuit, not the wiring." Not exactly. Depends on the circuit and the equipment which it supplies. In some cases, the overcurrent protection value is selected for the equipment, while the conductor size is also selected for the equipment. The rules for motors could result in a #12 being protected at 40 amperes in certain cases Examples are motors and air conditioning/refrigerating equipment. The protection is based on conductor size alone in the case of general purpose branch circuits in residences and many other applications. The NEC has many nuances and special cases that must be considered. In the case of the range, if the manufacturer of the range specifies a maximum of 40 amperes for the supply overcurrent protection, then the installation of the 40 amp breaker is correctly indicated-- and needed.

All the wire used in a circuit must be sized for the protective device. So, no, you can't connect two #12 cables to a 40a breaker. Not even if you're sure the loads are appropriate. Not code compliant, not safe. If I'm not mistaken, a permanently installed heater is considered a sustained load, so is subject to the 80% load rule. Thus a 20a 240v circuit can supply up to 3840w worth of heaters and a 30a 240v circuit up to 5760w. First, make sure your service has enough capacity to handle the additional load. No point in proceeding if you're just going to trip the main on some subzero winter night. If that's up to snuff, to power your heaters, I'd probably install a 100a main lugs subpanel. Feed the sub from a 100a breaker in your main's last remaining double pole slot. Then run your heaters from breakers in the sub. It sounds like two 30a circuits (with #10 wire) would do it. If some of this is confusing, I suggest you get a copy of Wiring Simplified and study up before proceeding. Or just call a pro, as Bus suggested.

You definitely can't just randomly replace the 80A breaker with a larger one. Even if you did, you'd be limited by the 70A breaker outside... Don't even think about replacing that. 60A (what the water heater needs) is less than 70A (what you have), but you'd end up with some situation where you can use your hot water ONLY if you turn off everything else in your house. Do you want that? Basically, forget it. You'd need a service upgrade for this to ever work in a reasonable way.

OK, to answer the question, you can't tell about the loads without doing a proper analysis. What used to be connected to the 30A breaker. Seaborn: The way it works is that the panel is appropriately sized for the service and there are limitations on what you can put in the "top" section. That's where we run into a problem. The code that allowed these panels in the first place requires that all the lighting and appliance e branch circuits (the ones it sound like he wants to add) CAN NOT be connected to the top section (mostly the understanding is you don't know what someone might connect to them as opposed to the things in the top section which are fixed items: furnace, stove, dryer, hot water heater. This requirement persists in the modern code. 408.36 covers it. It was formerly 384-16. There were some exceptions but they don't seem to apply here. So the answer is NO, YOU CAN'T DO THIS by code. ProSource is correct. You could connect a subpanel to that 30A breaker and put your new branch circuits on that.