I installed one of these about 4 years ago and installed it as you proposed in your latest post. Had no problems with operation or inspection.
Good Luck!
(BTW, since this installation, I've strongly advised my clients to go with gas. The electric on-demand heaters require a huge amount of current and installation costs are disproportionatly high due to the wire, conduit (if required), etc. I've installed about 25 since, all gas)
