Even though you ruled out tankless you might want to take another look. We mounted our Rinnai outside. It's built to be there so venting (propane) is simple and since is is under the roof overhang line it doesn't impede as a setback situation.

The answer to your question is "Maybe", and it would require approval from your local inspector. If your tub waste & overflow is the glued in type that is considered permanent plumbing and they may approve that if you install the tee, then make a vertical riser so the lowest end of the pan drain is a minimum of 2" higher than the flood level rim of the tub, but if it is a slip joint tubular type waste & overflow, that is considered a temporary connection and you cannot insure that the pan drain would be connected if someone had to change it out in furture so I doubt if they would approve it. The more important code question is, where is the water heaters T&P line terminated? Code prohibits terminating the T&P into the pan. The T&P must also have a full bore line running by gravity flow to the exterior of the structure or to a clearly visible indirect waste receptor, however, in instances where you cannot achieve a gravity flow line, such as when a water heater is installed in a basement and it is below the house sewer, there is another option for the T&P. The T&P line can be removed and the port plugged, then you go to any convenient point on the hot water system where you can achiece a gravity flow drain either outdoors or to a utility sink or floor drain, you can install a "Pressure Relief Valve". You may discuss both of those options to your inspector and if luck is with you, you may get approval, but don't be surprised if they tell you to move the water heater to a more suitable location.

We got rid of all of our baseboard hot water heating runs as part of our current remodel. We had 18 feet of it and replaced them with 2 toe kick heaters that are connected to the hot water heating system. They are installed under our cabinets and have a fan with a vent in the toe kicks. I imagine the same thing would work for you.

Mallory, it seems that it's in everyone's best interests to keep the extra heater. You can always shut one off and you have a free backup, so long as it was free. The labor to remove it, should be motivation for the builder to leave it for you. It's got a vent sure, but it's still an atmospherically vented appliance that puts indoor air quality at risk. They really need to make those things illegal. You probably have little control in keeping your garage air separate from your house air at this point but it's something to be aware of. You could possibly do more to seal the mud sill of attached walls and be aware of the need to keep the garage-to-house door closed and keep the weather stripping fresh. For readers and posters perpetuating the myth that tankless (on-demand) water heaters save money, scientific studies have found otherwise. Heat pump water heaters are where it's at, especially in hot, humid climates or even cold climates when basements and tall crawlspaces are involved.