sjrmotorsports wrote:What about fumes? I was worried about mounting it inside the trailer because of the exhaust.
NO! 
I would be extremely hesitant to mount or use inside of the trailer-Hemoglobin likes CO (carbon monoxide) about 200-250 times more than oxygen, and once it binds, it is really hard to get it to let go. It only takes a trace amount to really build up in your system. I have seen mass CO poisoning cases from a propane powered forklift in a warehouse with 20+ ft. ceilings and big open doors. Due a pinhole leak in a heater, a very good friend lost an entire flight crew sleeping in a tent. Another consideration is the amount of heat and moisture that comes off of one of these things.
You could easily hang/mount the water heater outside and run the hose either through a pass-through connection (imagine a street water connection on both sides of the wall) or through one of the wiring covers.
In the next phase of conversion (In reading everyone's posts, and personal experience, I am finding that everything is like Ivory Soap- 99.4% done), I plan on setting up one of the propane on-demand heaters for doing dishes and providing hot water to my exterior kitchen sink setup

. It seems that 4 people can generate a lot of dirty dishes.

I am going to basically use a "Y" hose to split out the single garden hose supply to provide cold water and feed the heater for the hot, with connections to a high-neck faucet. A portable tank for collecting the grey water.
Pat