The recirc pump can go anywhere in the line. Probably best to locate it near the rest of the mechanical equipment, just for simplicity's sake. But the recirc is strictly a luxury thing. Don't expect it to save you any money. It'll burn more in electricity than it'll ever save in water usage.
The other big issue I saw with tankless is that they made more sense in instances where you needed a little bit of hot water, off and on, all day long. Most people, however, have big water demand spikes in the morning and evening (depending on when household members bathe), with a bit of use scattered around the rest of the day, but still concentrated mostly in the morning and evening.
So let's say you have a couple of showers running at the same time first thing in the morning. That's in the neighborhood of 5-6gpm, assuming just a regular low-flow head with no fancy steam showers or anything like that. The biggest Rinnai makes only does 5.5gpm at a 70F delta. So long as nobody is running the washing machine, dishwasher, or washing their hands anywhere else in the house, it'll keep up. But only barely. And you've got to size for that peak demand, even though it's going to sit there unused most of the day.
On the other hand, let's say you've got a 60 gallon standard tank WH. It's going to provide 100-120F water continually for 30 minutes, with some fall-off near the end as the tank temperature drops. But the big tank is super insulated, so once the water is heated to temp, it doesn't really use much energy throughout the day. That is, unless you've got folks in the house using a little bit of water here and a little bit of water there. Washing hands, running the dishwasher, etc, will make a tank heater run more often, since every water use introduces a few gallons of cold water to the tank.
The big energy savings in heating water comes from switching from electric to gas. Period. If you have natural gas at your house, and you're not using it to heat your water, you can "save money" simply by switching to gas when the water heater is due for replacement. That's less true with propane, since propane costs more money for the same energy density.
Depending on the way your house is laid out, there are some hybrid scenarios. Maybe you'd be better off with a small point of use heater at the kitchen and a tank that serves the rest of the house, but again, I doubt anything like that would "save" money. It would mostly be to provide instant hot water, which even a recirc pump can't provide in some instances ("home run" style pex designs, main trunk with long branches, etc).
