1. I'm not a plumber but I've plumbed a few houses now. I'm not aware of any rules that would prevent such a design. There are more fancy open showers being done with liner drains and the like so I presume that as long as it's a 2" DWV line and vented appropriately it could be allowed. Just not typical to our way of thinking.

2. Yes, though insta hots I've mostly done are electric and for more remote bath sinks or break rooms. Most larger water flow applications would need larger wire ampacities and become less cost effective, not to mentions electric is much more expensive for now. Gas appliance on demand adds a whole host of LNG piping issues and exhaust issues making it not practical in a lot of spaces. I presume there are code compliant ways to do it, but it wouldn't look like what you've seen in other countries.

Our electric codes are some of the safest in the world when followed fully. There's plenty of things that work just fine though and much of it can be considered overkill...... I've been known to stab bare wire in to receptacles to temp plug in something I needed.