WAYMAR83, ...it is imperative that you drain the gray water into a SEALED sump with its own pump and not into the bilge or any open containment area. If not, you will soon be wondering how can shower water smell as bad as black water.
There are shower sumps readily available at places like West Marine. Install a water trap between the shower drain and the sump.
As far as an overboard solution, maybe a manifold on one of the through hulls located above the water line.
re. propane instant water heaters
... can these units, somehow, be installed on deck therefor eliminating the oxygen depletion problem. Would it be sensible alternative to do so?