Water heaters are actually designed to put out water at 120-130 and have supply water as low as 40 degrees. Where we're located in VT, the water from our wells is typically that cold in the winter. The risk of condensation is actually greater when used for domestic water than with a radiant system. In a radiant system, even if the slab is 40 degrees, the returning water temperature will be significantly warmer than this. Our experience in this condition will be for the returning water to be 40-50 degrees cooler than the outgoing upon initial start-up in a cold slab which is much warmer than when this heater is used for domestic purposes.
We do worry about cold return temps to non-condensing boilers because condensation actually happens in the tank and will cause the cast iron tank to prematurely fail. As Radix2 mentions, this isn't as big of an issue with the newer condensing style. Water heaters, with their stainless, ceramic, or glass lined tanks can withstand the lower return temps and any condensation that may occur.
I'm not saying an inexpensive water heater is the way to go in all situations but since we've been in business so long, we've had thousands of customers use them with great success under the right scenario. Also, we set up many systems using boilers. I don't want to push anyone in any direction and only speak from our experience as to what works for us and what doesn't.
Talking about return temps from radiant vs groundwater temps for DHW misses the point I think.
Most of the time we use DHW, we do not use enough to drop the tank temp much below the set point - so the cold water coming in is not a issue. Sure, for the times the kids run the water out or the like, the flue will condense until the water is over the dewpoint and then it will stop until the next time - the duration is limited by the 50 gallons to be heated and the time between shower marathons...
It is a different story for radiant floors where the mass to be heated is many tons of concrete. In that case, you can have return temps well below the dewpoint for hours and hours - the heater is not just bringing 40-50 gallons of water up, but must bring tons of concrete as well before your tank and return water is back up to the 100-110deg required to stop condensing.
And again we are talking about the cheap $400 tank heater here - it doesn't matter if it is glass lined, the flue and burner assembly is plain steel and rusts very easily under the drip sizzle you get when they condense.
I absolutely agree with you that your Polaris tanks or all stainless models could be very good heat sources, but lets make it clear that your basic 6year water heater from the box store is not going to take it well.
the other issue I see with open systems is that while the tank itself is lined to withstand the oxygen in the input water - what about the cast iron pumps ? Do you recommend bronze or SS units or is it not really an issue?
The purpose of the pex barrier pipe and closed systems is not just to protect the heat source, but all the iron and steel components.