I was kind of thinking of a heater something like this, although this is driven by wind. For hydro, it is a little more productive only because the river always flows by...
Low Tech Magazine
So my idea was, to make my hydro heater legal, I would pour a decent footing underground on my riverbank, and to it imbed a pipe into that footing. Inside this pipe I would weld a smaller one that would spin around inside it. To that pipe I would weld a simple engine hoist, but modified so its arm was a lot longer. It would also be jointed so that the hydrokinetic turbine would float, and float level, but when struck by floating debris like a log or something, it would swing out of the way to let the log pass without inflicting damage. Then by spring pressure, it would snap back to being directly in the current again. With this cantilevered design, I would not be building in the river, which would be even less intrusive than a camp owner putting a dock out into a lake. My turbine would just arch out from the riverbank, and float the turbine in the river.
The turbine itself would be just as I said earlier, an S-type rotor, coupled to a speed increaser. That would power a flexible shaft going into an underground, and well insulated box with a rotor and baffles fitted inside it. As the rotor/baffle combination stirred and heated the veggy based hydraulic oil, a circulator pump would then circulate water from the water heater in the house, through a coil in the underground well insulated tank, and then go back to the water heater.
Before I added the latter part, I would do a temperature check to see just how hot the rotor/baffles would get the veggy based hydraulic oil in the tank.
For starters I would just like to make the hydro-heater take care of my domestic hot water needs. I would think it would all depend on how big my hydrokinetic turbine was. The beauty of the whole thing is, it runs by the house 24/7/365 so heat would accumulate, but also be used in time to domestic hot water use.