Re: Why doesn't anyone use propane refrigeration on a boat?
They are more the exception than the rule. In any boat I am aware of with a propane fridge or water heater the survey invariably asks for its removal as a recommendation that the insurance company sees. And I work on boats for a living so I see many.
As far as a water heater, it might be possible to meet ABYC with a closed combustion chamber vented outside only as long as it does not have a pilot light. I have never seen an installation like that though. I don't think a fridge could be installed that way though.
Living aboard in Victoria Harbour