Read my retraction again - The system shown in the video has no valve on the hot water discharge, best I can tell and based on what Carlton said. The valve is on the supply side TO the heater. Once you pull the handle (on the stock setup), the water flows into the heater and out the faucet. When you release the handle, the water pressure is held off on the supply side to the heater - the heater itself is kept at atmospheric pressure.
The way you want to do it, the heater will be supplied with street-pressure water at all times. That, mixed with the pressure generated from when water is heated, could cause bad news for you and your house.
Maybe a system exists where the heater is designed to be under constant pressure, such as water heaters for houses and larger sized instant-hot heaters. I'm not so sure that what you are looking to do is safe.
The only difference between the system I have and the one in the video is the brand and style of tap. Also, technically, I have a much better water filter but that's on the preheated side. In order to resolve this issue, I searched to figure out how the system operates. Basically, it is city fed but the tank is not pressurized. So after you stop using the tap, the water falls back into the hot tank. This makes me believe the system will work really well for my project! Here is the review from Amazon that led me to this conclusion:
2.0 out of 5 stars Serious Past Quality Issues, Hopefully Resolved, July 20, 2010
By Phil Shikuka "Philbert" (Terre Haute, IN United States) - See all my reviews
This review is from: InSinkErator SST-FLTR 2/3-Gallon Stainless Tank and Filtration System (Tools & Home Improvement)
(Original Review) This Insinkerator product suffers from a couple of design flaws. Like many here I found a puddle of water under my unit about two years after installing it. Checked into buying a new unit, but at $200 I wasn't going to give in easily. After reading other folks' experience with the unit I opened mine up and found the obvious source of the leak. There is a 1/4" plastic vent hose than helps handle the return hot water after you release the faucet handle. Since it's a non-pressurized unit, all water in the line up to faucet gets returned to the tank after you release the faucet handle. This hose, combined with a plastic overflow tank handles the water return. The root cause of the leaking problem is the type of tubing that was used for this one part. In the hot water heater it sits at near 200F, 24/7/365, and it can't handle the heat. Mine had turned a dark brown to nearly black color and had completely failed where the hose was routed right along the stainless steel tank. Every time we used the heater the return water ended up in our cabinet. Because of this one piece, customers everywhere are replacing their tanks prematurely. It can be fixed if you are handy. Please note that any modification of your unit will void the warranty, and rightfully so. If your unit is under warranty you should call Insinkerator at 800-558-5712 and have them replace it. If you buy a new unit, don't mess with it -- it's under warranty. Even if it's out of warranty, give them a call -- there's a good chance they'll do right by you. If you do try and repair it, know that you are on your own. Insinkerator strongly advises against any owner-initiated component repair. What I have done has been untested by Insinkerator and they have implemented their own fix in the current product design. Anything that happens during or after any repair you make will be your responsibility. And remember, nothing lasts forever.
HOW TO REPAIR: Basically you have to replace the hose with the right kind, and fortunately it's pretty easy. I recommend silicone tubing (rated to 500F), and you'll need some with 1/8" or 3/16" inside diameter. I bought some from an Amazon seller, 1/8" ID and 3/8" OD with thick 1/8" walls. (Edit: The original tubing is 3/16" ID but I went with 1/8 for a good snug fit. 3/16" ID tubing will also work quite well, and is what I would recommend at this point if you can find it.) Search on Amazon and you'll find what I'm talking about. Unfortunately it's only sold in 10' or longer lengths, and you need less than a foot. If you can find it locally, all the better. For good measure get a couple of small plastic zip ties (cable ties) or the proper sized spring clamp to secure the new tubing.
1) Unplug, drain, and remove the tank. After unplugging the power cord, run water thru the unit till cold water flows out the faucet. Then place a large bowl (1-gallon capacity minimum) under the tank, unscrew the drain screw, and let the tank drain into the bowl. If you can easily shut off the water supply do it now, but it is not necessary as long as no one uses the faucet when you are working on the tank. While draining, remove the three tubes from the top of the tank. One has a spring loaded clip you need to depress to remove the tube and the other two are silicone and plastic tubes that just pull off (might vary a bit based on the age of your unit). Loosen the mounting screws, and when the tank has drained, remove it from your cabinet and find a water resistant place to work on it.
2) Disassemble the tank. Really easy -- there is a small screw on the top that holds the two sides of the plastic shell together ... remove it. The two sides of the shell pull apart fairly easily but you might need to muscle it a bit. Once you get them apart, remove them from the unit and place aside. Then remove the temperature dial and put it aside. At this point you will have the guts of the unit with the steel tank encased in a dense styrofoam shell. Take a minute to examine the way it's put together (pictures wouldn't hurt either). You'll most probably easily pick out the problem part -- it will probably be very dark and brittle, and one end will be attached to the side of the water inlet port. Cut the hose somewhere before the metal (maybe plastic on yours) water inlet port it attaches to, and you will then be able to remove the upper styrofoam shell. After that you will see where the other end of the defective hose goes -- the bottom of the plastic overflow tank. You will need to cut the old zip ties (or maybe spring clamps) at each end of the hose to fully remove the old hose.
3) Inspect and dry the full unit. You may want at this point to remove the other styro shell piece and completely dry everything. At this point I discovered that the leaking water has badly rusted several of the screws holding the two pieces of the stainless tank together. IMHO they should have used stainless steel screws. I wasn't sure whether or not the rust has led to any leak in the tank itself, so I disassembled the stainless tank (fun to do with rusted screws I'll tell you). Mine took a T-10 Torx driver for the screws, and I eventually got them all out. A trip to the hardware store got me some #6 x 3/4" stainless machine screws and lock nuts. If you see anything else besides the hose that could be a problem, you'll need to deal with it for a complete repair.
4) Reassemble the unit, installing the new hose as you go. Put the tank back in the bottom styro shell. Attach one end of the silicone hose to the plastic overflow tank and secure with a zip tie cutting off the excess tie. Put the plastic tank back in the upper styro shell and slide the two back onto the top of the stainless tank. The plastic tank lines up with the silicone hose to the front of the unit. You'll route the hose along the tank flange to the right of the unit just like the old hose was. Once the shell is as far down as it goes, route the hose along the side of the styro shell following the groove for the old hose (not a perfect fit, but that's OK) and then over the top to the water inlet port. Hold it in place and see where you need to cut the silicone hose to fit the port without excess slack in the hose. Then cut the hose, attach it to the port and secure with a zip tie. Replace the thin upper piece of styro over the top of it all and reassemble it all into the plastic shell. Take your time and work the two halves together, making sure to get the power cord grommet correctly into the cutout in the shell. Get the bottom together first then work your way up. Pay attention to the new hose, keeping it tucked in behind the side of the front half of the shell (don't let it end up stuffed behind the back half of the shell. When done properly the shell will snap together nicely, and you may note a slight bulge where the new hose is if you used the thicker silicone tubing like me -- that's OK. Put the small screw back into the top the shell, and reinsert the drain screw.
5) Reinstall and test tank. Just reverse the removal steps. Open the faucet until water flows before plugging the tank in. Then use the faucet normally, checking regularly for any leaks. Mine has been leak free for two weeks, and should last for years now.
That's it, and it's probably easier than it sounds. For a grand total of less than $25 (with nine feet of hose left over) I have a fully functional tank again. The rest of the unit is very well made. The tank iteslf is built like a ... well, a tank, so I expect it to last years. Good luck with your home repair efforts if you try. If you have questions or need some of the correct tubing email me at pbj1959 at gmail dot com.
UPDATE 9/13/2010: A couple months now and still no leaks. I've been corresponding with another owner who ended up getting a replacement from Insinkerator. He sent me pics (thanks Jay!) that show they have changed the design of this particular tube that has been causing so many problems. The new design uses a different type of plastic for the tubing and avoids routing it along the steel hot water tank. They also seemed to have added a different type of gasket between the two tank halves. From what I saw, new units with this design won't suffer the same problem I described above, but how to tell whether any one new unit purchased at retail will have this fix incorporated??
(EDIT 01/27/2011) My initial review above was written based on an old design that had some quality issues. From my communication with Amazon shoppers like you, and the Consumer Relations folks at Insinkerator, it appears that current models have been redesigned to hopefully eliminate the problems I had. It also appears from those same communications that Insinkerator is going beyond the warranty period to replace some consumers' units when they discover this problem. Because of that I have upgraded my rating to a neutral 3-stars and modified my review somewhat. If you have problems with an existing unit, I also would encourage you to contact Insinkerator support to see what they can do for you. They're very good in my experience when your product is in warranty. I've heard from several folks that Insinkerator has replaced their unit outside of warranty too when they had this problem. Obviously there is some limit to what they will be willing to do, but the call is free. So if you've found this review because of a problem with your existing unit, your first step should be to call Insinkerator at 800-558-5712 and give them a chance to make it right. Post here with your experiences.
UPDATE 3/18/2014: Well, my repaired machine is finally starting to act up again. Lately it is sputtering and "spitting" a lot -- somehow air is getting into the flow resulting in hot water splashing out of the cup when that happens. Oddly enough, I have not found a leak yet. Everything on the outside seems dry, but I can't explain the air and sputtering problem. At some point in the near future I expect I will need to replace the unit. Even so, I got almost 4 more years out of my leaky unit by doing the tube repair, so the effort was well worth it.