Not all ground water is at 50F
Some are 65+
No, I didn't account for the cold climates and running completely out of any hot water.
And, even if the cold water is coming in, heater is running, the internal water is mixing as it is used. I seriously doubt, could be mistaken though, that your girls will not turn off the faucet well before the shower reaches 50F or 70F perhaps, or even higher.
No, I don't remember running out of hot water below 105F on the problem heater or 120 on the new heater, even on laundry day although that usually uses warm or cold water
. At 2.5gal/min shower heads, 130F tempered with cold lasts a long time, but that's just me
How would the external blanket retain moisture more that the internal blanket does already, whatever is on the inside. The escape routs are the same practically, except for a couple of support tapes to the top to hold the blanket from sliding down. I am just too dense to see.