Pangea,
I am certainly no expert (though I play one on the internet). I did a bit of research into these things. And it sounds like you understand what the problem is. Simply, the incoming water temperature is too low to get the water to the tempertaure you desire with the water flow you desire.
These things certainly work, the issue is that unlike a tank system that stores water and heats it to a specific temperture via elements and a thermostat, the tankless must heat the water as it passes through. Hence, a rated unit can only raise the temp a certain amount.
If you live in the mountains of Vermont or similar cold area with incoming water source of 40 degrees, it takes a lot to raise the temp to 120 degrees.
My guess is in such an area maybe two units would work. One on the incoming source to raise the temp from 40 to 80. The other takes it from 80 to 140. I don't know if this is possible or allowed. Just an idea.
I am thinking about installing one just for the master bath in my house. The plumbing from the hot water tank to the master bath is a LONG run. It takes 3-5 minutes for hot water in the winter. And uses a lot of hot water just to heat the pipes on the way there. We will also be testing capacity when my relatives come to stay at Christmas. Only two of is is OK but 6 might get interesting.