Both water heaters are reverse plumbed the same way; in other words, the house cold water supply connects to the "Hot" connection on the 1st tank in the series. Then the pipe runs from the "Cold" connection on the 1st tank to the "Hot" connection on the second tank. The final feeder supply emits from the "Cold" connection on the second tank, and feeds off to the house. At least that's how I traced it, and the final "out" line from the 2nd water heater attaches to a pipe in the overhead floor joists that is labeled "Hot". If nothing else, he was consistent.

I can't see any damage that it would cause, but as Jim said, it would tend to pull cooler water off the bottom of the tank. I have to go back up there on Wednesday, so will try feeling the water lines (I have tried that in the past, but the physical connection to the tank usually makes the pipes hot anyway). The tanks are also tucked into a small closet making it hard to navigate around.

Also, what I didn't mention was this home is in a remote mountain area that is famous for amature builders doing odd things so nothing up there surprises me. Oh, and the property only cost 1.6 mil; the house is so-so, but it goes with 90 acres that border the Forest Service. At least the land is pretty. Elk and moose all over the place if you like that sort of thing.