thx for checking.....i was hoping it would work, because the plumbing involved in installing a regular (tank) water heater is awful....not sure where to go next with this, but will keep hunting for ideas.

a small tankless installed at point of use?

http://www.e-tankless.com/applications.php

[Point-of-Use Water Heating
Due to their small size, tankless water heaters are well suited to point-of-use applications around the house and are ideal for providing hot water to areas of the home that are physically far away from the existing water heater. They can also serve the needs of businesses, schools, and other organizations by providing low-cost hot water for lavatories, cafeterias, and more! ]
http://www.tankless-water-heater.com/products.html

Or
[Are there any special plumbing or electrical requirements?
The units are designed as a replacement for a conventional tank water heater or as a preheating booster to an existing tank system. Any plumber can install the wherever the existing unit is located. The unit is designed to use the same 208 - 240 volt current that your conventional electric tank water heater uses. Complete Installation Instructions and a User Guide are included with each unit. The installation is a relatively simple procedure.]
http://www.gotankless.com/faq_1.html

i don't know how this would apply with the oil heated water tank.
but if electric power is available and the incoming water line - that should be all that is needed - except for the cost of the tankless heater and the installation.

or a tank to use as a pre tank - to let water warn a bit in basement or garage before going into the oil heated tank.

just some thoughts on it.