How many times have you turned on the Hot water faucet/valve at a sink/shower etc and had to wait a long time for the hot water to make its way through all the piping from the water heater, pushing cold water through as it goes. Depending on how far away the tank is, this can be 1 minute or more and as you wait, you're sending perfectly good cold water straight to the drain. How about 3 settings on all hot water faucets/valves? 1 for Off, 1 for "Recycle" and 1 for "On". The Recycle setting simply returns the water back to the hot water tank. The facuet would have some kind of indicator of the water temperature on it - maybe even a small piece of thin walled pipe etc that heats up/cools down fast and that the water passes through. The user turns the hot water faucet to "Recycle" and waits until the temperature indicator is hot enough, then flips to "On" to start taking the hot water out of the system. No more wasted cold water.
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The complexity of returning gray-water from the drain to the hot water heater is much exaccerbated by the fact that the rest of the water system is under pressure. So somewhere along the line, you'll have to have first, a valve and sensor system to decide when the water is really 'clean' and can go back to the water-heater, then you'll need a pump or pressurizing system to get it back into the 'tank.' I don't think this is cost effective.
Many new expensive homes have a loop-system where hot-water circulates while still under pressure, so you have hot-water at least near your source if not in the line, all the time.
I greatly favor gray-water recycling for instance to flush toilets (already on this site), but I'm against re-introducing it into the potable water system.
Also, people that live in the southwest forget they they have issues with 'saving' water, but most of us don't. Our water comes out of the river and goes back into it when used.
To hrench, You're misreading what I'm saying. I'm not talking about returning gray-water. The point is that the water NEVER leaves the system until the "On" knob is turned. It is recycled from the faucet itself, not the drain. No water comes out of the faucet into the sink/shower stall etc until the "On" knob is turned.
I do agree about the pressure ie needing some way to fight the pressure to get it back into the tank. If there was some wayto handle that, then maybe this is viable??
Well then your idea sounds a little similar to hot-water loop systems I've seen, but apparently your loop will go all the way to the fawcet. Its a good idea.
As for the energy required for circulation, you'll need an energy input (pump?), but this does sound like a good idea.
Small electrical point-of-use water heaters go a long way toward solving this problem, because they are very close to the faucet. They are common in older homes in Europe.
A small point of use or end of run circulator pump is simpler from an electrical use and safety perspective.