Starting an overhaul on '77 Holiday Rambler Wide World

Another question I have is regarding hot water...It seems like the price to either fix or replace this original hot water heater is going to be quite expensive. Has anyone used an on demand type like I have pictured? I use one of my hot dog cart and it works quite well. I know they are originally made for portable showers in a camping environment but I can't see why I couldn't use it in this situation. It needs to be vented so it needs to be mounted outside. Thoughts?