In SW PA I find that tankless gas works fine in the summer but in the winter when groundwater temps dip there are problems. Showers are OK but wide open like filling the bathtub or the washing machine just gives lukewarm water.
Why a larger line? I had my pressure upped for free. Love my tankless.
Bathtubs can be a problem with tankless, depending upon the water fill line size of the tub faucet and the tub size. If you have a 3/4" supply or one of those "waterfall" type spouts you will not get the same "visual affect" with a tankless as a tank, but the tankless will fill the tub. The 3/4" fill can supply up to 10-12 gpm. The tankless will regulate the flow to guarantee temperature is at the set point on the unit. That is usually 120*.
I will use Rinnai as an example as I've worked with them since '91, use them in my homes and am a technical trainer for them. I will not use the 199,000btu units as that is much larger than what the OP requires. The RUC-80i is a .95 EF unit with a max input of 152,000 btu. When in the winter your supply temps drop, and that is dependent upon where your water originates, the units output will decline. (In my MA home I usually saw a 5-10* drop for about 3 month of the year. With my current well the temps are consistent year round.) Specifically, the RUC80i at at 50, 60 or 70* temp rise will produce 5.9, 5.0, & 4.2 gpm respectively...all day long. If you sit in a bathtub over 105* you are no longer bathing but par-boiling, so that is the max temp.
Tankless water heaters, at least the good ones, are designed to guarantee temp at the expense of pressure. In this case if you tried to fill a tub with that 3/4" supply the unit would reduce the flow to guarantee temperature and with that RUC80i you would likely fill the tub at around 5 gpm. I have a 40 gal clawfoot tub and it takes about 5-8 minutes to fill the tub. I'm not suffering.
The number one mistake in tankless installations is inadequate gas line sizing. You may not need to increase the size of the gas line IF THE EXISTING SYSTEM CAN SUPPORT IT, but eyes open on this. You can pipe them with 1/2" pipe but the system has to be spot on to make them work. 3/4 gives more margin for error.
Location matters. Don't put it out in the N 40. Try to stay close to the primary point of use. The RUC80 can vent with PVC pipe or with the proprietary concentric poly-propylene 5" pipe. If you are on an outside wall, use the concentric pipe. If in the middle of the house the pvc may be a better option. The concentric is one 5" hole in the wall. The PVC has two 3".
In the past recirc systems for tankless have been a problem. Today, you can use Rinnai's new wireless module to operator the recirc system. Install a wireless push button up under the kitchen cabinet and the wireless motion sensor in the M Bath. You can control the water heater on your mobile device and also receive error codes if the unit is not happy. It is a slick system and is backwards compatible to all Luxury and Ultra series Rinnai's made since '06. V series does not have the Circ-logic so no go there.
For a couple days, pay attention to exactly how many minutes a day you actually have a hot tap open. I think you will be surprised at how seldom out of 24 hrs you are drawing hot water. I put in my first unit in our home when my girls were middle school. My gas bill dropped by 40%. It should have been greater savings, but once people know that they are not going to run out of hot water they tend to linger a bit more. Better comfort in other words. No one ever ran out of hot water. Years later a classmate friend of my daughters was getting married. We had a house full of kids. About 18-20 people showered and we never ran out of hot water. Now in our new home it is just the two of us but hot water is never an issue.
Hire a good guy who has attended the factory trainings. Get off on the right foot.