I've been looking at several designs for a rocket water heater.
And what comes to mind when considering the factors should be something like in this sketch I made up.
That said, I do have access to wielding equipment and old water heaters.
* Operating at normal water pressure (might considder two pressure/temp valves on this)
* Added vertical steel fins between the water and exhaust (Size should be tested, as this might induce too much drag on the exhaust)
* Isolating the area above the riser exit to reach sufficient combustion temperatures before it cools off by the walls (Some people that have constructed with water all around and over the inner barrel seems to have issues with getting draft)
* Need to figure out something smart to do with the exhaust (Thing is to be buildt outside in a shed)
* I should move the cold water inlet to a low location and the heated water outlet to the top