Hi Andy,
First, I would confirm that what you heard was correct. I am contacting Watts to find out what they have heard and will post their response here.
Second, and based on what has been found out from the first step, would be to recommend a plumbing contractor install an appropriate valve. Whether that means the plumber leaves the Watts 210 in place or installs something else, possibly like this Taco valve (NOTE - right click over link and select 'Open in New Window':
http://www.taco-hvac.com/en/products/WA ... ategory=65 ) which sets in the pan below the water heater and, when water gets in the pan, shuts the water off as well as shutting the gas off.
The discharge from a standard T&P relief valve would discharge into the pan. When the pan starts to fill with water, the valve shuts the water supply off.
A valve like this is a recommended valve to have installed at any water heater in the pan.
Another thing to remember is that water heaters are designed to be installed high and dry, not in any water, and that any water heater setting in any pan will have that water heater setting in water - water heaters are not designed to be partially submerged, which is what that would be. The easy solution is to install some method of raising the water heater above the overflow level of the pan.
You can use the stand which is raising the water heater 18 inches and place the pan under the stand, you can place concrete pavers in the pan to raise the water heater up, there are several options. The pan under my water heater is aluminum, so I laid a 20 inch diameter piece of shower pan material in the bottom of the pan, set in a 20 inch diameter concrete stepping stone, then set my water heater on top of the stepping stone - my water heater is now no longer in the water.