I'm no plumber but from what I know of a similiar problem at my parent's home where they have well water, no matter how big your pipes are or how big your water heater is, it won't work.
Well water at their home doesn't come into the home at the same pressure as folks with metered water unless, of course, you can afford a powerful pump AND you have the water volume to go along with it in your well. Those 2 items are a must to 'duplicate' a home that gets public water. With that in mind, let's assume you're gonna sick with what you have.
My folks got a plumber to install an anti-scalding mixing device. Now, when my wife and I go to visit, when we're taking a shower and someone flushes, at worst we get a drop in pressure. No longer are we getting burnt! My folks recently installed a charcol filter on their well water system so the jury is still out on that.
As for Sally wanting a tankless solution, you really can't do 2 things at once with that type of system. IN other words, if you want hot water for the shower and hot water for the washing machine, 'someone' is gonna suffer. ON-demand hot water heaters have been used in Europe for years and years and are just catching on in the States. It's a tough call on this particular subject.