Val... we have the Dickerson fully vented propane fireplace (Newport) - there is no concern about wetness, combustion air is drawn down a dual tube stack, and the products of combustion are fully vented as well. The deck fitting is very compact and should prove no real obstruction to your sightlines. It has a fan to blow the heated air and has a nice ambience as it is really a fireplace, you can see the flame through the window in the door.
West Marine, Steveston here in Vancouver, all carry these models - clean, non smelling, it works great. They have a 9000 btu (ours) and a larger 12000 btu model.
Check it out before you resign yourself to a potentially smelly diesel heater.
Were I staying local to propane supplies, I would consider that and the fairly sensible dual stack set-up (the book I mentioned discusses it). But I'm saving all propane for the stove duties. It makes sense given our situation to rely on the fuel we'll always have in abundance (140 gallons diesel, plus 10 gallons gas, 5 gallons lamp oil, 5 gallons kerosene, 5 gallons 15W-40, 200 gallons of water and god knows how much lubricating oils, greases, paints and primers. Add to that two 20 lb. propane bottles and the required "international" adapters, and the thought of heat vs. cooking becomes an issue.
The idea of a diesel heater is its simplicity and ubiquity: if properly installed, it is very frugal and needn't smoke or stink. I've considered simply installing it in the pilothouse for the purpose of keeping gear dry, and then using fans to send the heat below, but I think I can actually plumb into the hot water circuit with a car block heater or two and accomplish the same thing with engine heat. If we are sailing in cool weather, simply lighting oil lamps dries out the boat, but if we are going to liveaboard in a Toronto winter, or overwinter in Britain/Ireland/Canadian Maritimes, it becomes essential.
Propane is possible in a North American/coastal situation, but it simply isn't available a lot of places, or if it is, there are squirrelly adapter issues. Europeans use butane, CNG and something called "camp gas". Kerosene is still used in spots, even though it's dirty. I've seen actually quite nice diesel stoves on passagemakers. Anyway, a diesel heater makes sense because I can't predict we won't go well off the beaten path and/or high latitude cruising.