My 20 plate is installed so the hot water goes into the tank. This is how all the MFGs recommend it to be installed. If you have young ones or guests in your home DO NOT install it until you have a mixing valve installed, the water the plate produces (even with my boiler set to 165 max) is smok'en hot and WILL hurt a person. There are two popular automatic valves, one works pretty well and costs $, one is less $ but doesn't work well or for very long. Cant remember the part numbers or the name of the bad one but I got the good one, made by TACO. Expect to pay around $100.
You asked about the best way to hook up your water heater and I am not sure there is a best way unless you are spending lots of money to heat water. We use a heck of a lot of hot water at my place. To give you and idea our gas bill (water heat only) this summer was running over $100. So I have more room to work than most others when it comes to spending money to save some, if you know what I mean? I started out with a side arm unit and while it does make hot water it is slow. Might be OK for single men or households with low usage, no way one will keep up with 5 in the house and clean freak wife. I added the 20 plate this summer and it will make all the hot water that will run out my taps at 60 PSI. Problem with a plate is that nothing is heating the tank when your not running water so you must leave the water heater on or have less than hot water when the system has not been used for a long period. How long? depends on how well your water heater is insulated I guess. Once it cools off I am sure that a person would have to run lots of water to heat things back up. Anyway, with my side arm still hooked up and a plate exchanger I am now totally independent of the utilities for domestic hot water but it came at a huge cost because of the cost of copper fittings and valves. Guessing I have $550 in everything, maybe more. I have as much in by building by-passes as I have in the heating units but I can by pass the plate, side arm and the heat exchanger in the duct work. Did I go overboard? who know but I can isolate any of the units and remove them while leaving everything else running. My camera is broken so cant give pictures right now. Sorry about being so long winded in my response.