Wow, there's a lot to unpack about the car dealership "horror story". There's no mention of the age or how many decades past the Warranty period the water heater was. There is also no mention of how many (at least yearly) inspections had been skipped by the business owner. Inspections that are usually required for privately owned buildings open to the general public. The scenario you described would require the TCO, the thermostat, and the T&P valve to fail simultaneously (winning the lotto and being struck by lightning on Feb. 29th) because only one operational safety would be required to avoid that. If I remember all the details in the posts, I believe it was stated that it was a 120 gallon heater which would have been way overkill for a few restrooms (no bathing facilities) and undersized if they were using it to wash cars. The more likely scenario is either someone tampered with the heater to bypass the thermostat or the safeties (TCO or T&P valve) or ignored the regular fault opening of the T&P valve. If, as stated in the post, all the gaskets in the faucets and toilets melted you would not have steam coming from them, you would have warm water at best because failed gaskets cause valves to leak. If all the valves were leaking you would have a constant flow of cold water into the water heater. And now onto the whole exploding water heater myth. The tanks on water heaters are only designed to hold slightly more pressure than the T&P rating. Anything more would cut into the manufacturer's profits. They are also designed to not fail catastrophically (explode). Seams (welds) will zipper open and instantly reduce pressure to around the incoming water pressure.
The other item I would like to address is everywhere you look people are saying "test your T&P valve regularly" (anywhere from annually to monthly). Let's get this straight, you are not "testing" your T&P valve, you are manually forcing it open and dumping hot water on your floor (because most T&P valves are not plumbed to a drain). To test a T&P valve for functionality you would have to exceed it's temperature and/or pressure ratings. As well, manually opening the T&P valve often can actually lead to premature failure (and potential for scald injuries). Because of the increased temperature in the water heater, there is a high level solubilized minerals in the water in the tank. When you manually open the T&P you can cause either mineral buildup on the seal and/or seat (fail open) or mineral buildup on the stem and/or spring (fail closed). Stop opening your T&P. If you are worried about the integrity of the T&P, just replace it.
Now, onto the actual subject of this thread. Shut-offs on water heater outlets. It amazes me when people talk about what is in the code book like Moses just brought it down from the burning bush, but doubt it's validity when something isn't in the code book that they feel should be. Plumbing code in most states is governed by the department of health. 95% of the code is about health and safety (like having a T&P valve on a water heater), the rest is comfort and convenience (like flow rates to fixtures). If there were a real (not a perceived) health or safety concern with shot-offs on water heater outlets, it would be explicitly prohibited by code. Plain and simple. Besides, what would you call zone valves, other than shut-offs on a water heater (or boiler) outlet.
Without the shut-of on the outlet you would be forced turn off the main and drain down the entire building to change out the heater, replace side mount anodes, replace the elements on electric water heaters or control valves on gas water heaters. Why might you ask. It's because most homes do not have sinks with separate valves anymore. They are single handled combination valves. When you turn off the supply to the water heater, you still have cold water feeding those combination valves. You can't drain down the water heater, because the reduced pressure on the hot side of the valve allows cold water to flow across the valve and into the hot water lines and back into the water heater. Draining down the entire building is also extremely time consuming because the water heater drain valve is usually the lowest point in the plumbing system and they are woefully undersized (1/4 to 3/8 inch at best).
OK, let the hating begin.