He should have used a Gen-Turi on the generator- that solves that problem.
As Pam says, my Newmar Ventana was all electric, and I had the Oasis (Newmar's hydronic system similar to the Aqua Hot) that ran on both diesel and electric.
When I was plugged in to shore power, I used the electric portion (same as I did in the Beaver I had with Aqua Hot) unless it was so very cold that the electric couldn't quite keep up. That was a rare occurrence for us, as that would have been under 30º F in most cases, and I found even then that I could turn on the diesel function for a short time, until the water system got hot (usually not more than ten minutes or so), then rely on the electric to keep it there most of the day, with the diesel function turned off.
When I was boondocking (such as at Quartzsite), I did have to run it on diesel during the night on those rare occasions when it got cold enough, but I usually tried to park such that the fumes wouldn't bother anyone -- note that, unlike at least one comment above, my Oasis exhaust was on the passenger's side, as was the Aqua Hot exhaust on my Beaver. The generator exhaust on both was on the driver's side.
So in the 11 years that I was driving DPs with hydronic systems, I probably didn't use the diesel function more than a handful of times other than at Q, and not much more then. In point of fact, we got plenty of hot water from the electric function, even at Q, during the time we ran the generator morning and evening for cooking, recharging batteries, etc. And we did use a Gen-Turi for the generator.
I would also note that the (much) more common propane systems aren't as bad as the hydronic in terms of exhaust, but are LOTS noisier inside, with much less even heat, and somewhat noisier outside, as well.
It occurs to me that I probably should mention that although the Ventana was all electric, the Beaver had propane and we never used the propane oven (the microwave/convection combo was great), though we had to use the burners. Still, after a while we also had a portable induction "burner" in the Beaver.
Hope this helps, Lee.