In a vacation home that's only used a weekend or two a month, a tankless makes a lot of sense. But, in this case, the only fuel options are propane and electric. And, due to the electric service, the biggest electric tankless is probably limited to a 7.5KW unit which is relatively small. Interestingly, right now in the area, the price of propane and electric are almost the same per BTU/H when you factor in the losses up the flu with the propane heater.

So I'm thinking a possible solution is an electric tankwater heater set to about 60F which should us minimal energy most of the year when not being used (Whirlpool makes electric heaters with a 60F vacation mode) followed by a small 7.5KW tankless. That should give about 1.25 Gal/min at temps hot enough for a decent shower. So you show up at the house and have a limited amount of immediate hot water. If you're going to stay a while and want more hot water, you can turn up the tank. When the tank is hot enough the tankless probably won't even turn on.

My question is if the above scenario is code legal? Can you put a small tankless unit designed for point of use with 1/2" fittings in series with the main hot water line for the entire house? I've looked at the IRC 2009 code and it's not at all clear about water heater capacities, etc. It mainly says you have to use an "approved" solution and they're mostly worried about wiring, gas lines, venting, drains, expansion valves/tanks, wiring, etc.