Some of the old thermostats only controlled the gas for the heater. The fan may be conrolled by nothing more than a Thermodisc. As the heat gets above say 130 degrees F the fan will start and when the temp gets below 90-100 degrees F the fan will shut off since the contacts in the Thermodisc are normally open. I'm not saying yours is that way, but it is old enough that it may be.
As far as your water heater, it is usually easier to replace it (decent prices off the internet) with a like model. The old Bowen heaters are now made by Atwood. I replaced my old Bowen with an Atwood with an electric igniter. I'm not familiar with your particular instant water heater.
If the structure of your trailer is in good condition, your project can be a lot of fun and very rewarding if you just take your time and don't give up. There is a lot of work required. I only caution you on the structure, because that is where I would draw the line on trying to fix one. A Holiday Rambler was a decent trailer when they were new.
