Your gas pipe plan seems reasonable -- 1" pipe carries a lot of CFH of gas. We'd have to know the pipe length involved to be sure, but it's likely that covering most of the distance with 1" will keep the pressure loss in check.
Allow me to share some personal experience based on 11 years of living with a Rinnai instant water heater (R75LS). First of all, let me say I've loved it and would buy another.
Let's talk about the elephant in the room first: the GPM rating is peak. Look at the water flow curve in the technical data section of the user manual. With water input about 50° F and a set point of 130° F (temperature rise of 80° F) you can expect about half of its rated/peak GPM.
Don't despair over the flow curve, however. My model, and their others too I presume, have an interesting behavior: it restricts the output flow as needed in order to achieve the output temperature you've selected. If I want 130° water I can open all the hot water taps in the house and I'll get a relative trickle from them all but I'll get the temperature I asked for. The manual doesn't plainly say that the heater behaves in this way; it's just my observation.
In my household we use this flow limiting effect to our advantage. We set the heater to a suitable temperature (106°-108° in winter; 104° or sometimes cooler in summer) before getting into the shower. Then we turn on only the hot water tap. If somebody starts another shower or runs hot water elsewhere (or even flushes the toilet!) then the pressure (flow) drops, but the shower temperature stays constant.
We turn the temperature back up to 120° after the shower. Honestly, sometimes we forget, but the dish washer has a built-in water heater anyway so it's not a problem.
Frequent changing of the set point may sound like a hassle. The available wired remote controls ease that a lot, and I recently learned Rinnai has a WiFi module (US$80 when I last checked) with app and smart assistant support to make it even more convenient.
Like Harper, my suggestion is to go all-in on the tankless -- use the remote to select the temperature you need for the activity at hand and open only the hot water tap.
I ran a few experiments with my water heater tonight. A 2 gallon paint bucket and a stop watch were used for metering water; a thermocouple held in the water stream was used to measure its temperature. I ran the bath spigot rather than a shower because it demands more water.
Experiment 1: Heater at 106° filling two bath tubs simultaneously
Water exited the spigots at 101°. Bath 1 filled the bucket in 57 seconds (2.10 GPM) and bath 2 filled the bucket in 53 seconds (2.26 GPM). Total flow 4.36 GPM.
Experiment 2: Heater at 106°, filling bath 1 only
The bucket filled in 34 seconds (3.53 GPM).
Experiment 3: Heater at 120°, filling two bath tubs simultaneously
I adjusted the hot/cold mix at each tub until water exited both spigots at the same 101° as in experiment 1. Bath 1 filled the bucket in 53 seconds (2.26 GPM) and bath 2 filled the bucket in 50 seconds (2.40 GPM). Total flow (hot+cold) 4.66 GPM.
As expected, the hot water flow around 4 GPM is just over half the "spec" rating of 7.5 GPM. Turning on the second tub decreased the flow at bath 1 by 1.43 GPM (41%). I was surprised to get more total water flow in experiment 3, but in my opinion the difference is minor. I prefer dependable temperature over slightly higher flow.