What are the effects of changing water pipe sizes?
Changing from 3/4 to 1/2 and back will not cause any problems, the point of use heater will have a lower flow rate than the 1/2" pipe is capable of and the higher you need to raise the temp will be the restricting factor. Or to say it differently if you need to raise the temp 40 degrees you may only have 1 gallon per minute flow, shower if you only need to raise the temp 10 degrees you may have 3 or 4 gallons of flow. There should be heating curves with the unit you install. But the pipe size won't be a problem in this case.