Yes it is normal for the temp to drop quickly when there is a large domestic hot water demand. How quickly depends on how much water your system holds, (more gallons equals slower drop and slower to rise) and if it is actually heating all the water (plate exchanger) or part of it(side arm) I can have the air handler in the shop calling for heat at the same time as the house heat and the OWB temps don't drop as fast as when the ole woman is in the shower. Think of it like this, if you opened the drain on your OWB to a similar sized stream as a wide open faucet and stuck a garden hose in the top to keep it full the temps would drop fast and nobody would be surprised by that right? It's no different when using a heat exchanger, that wide open tap of hot water is X gallons per minute that has to be heated to X temp.