m Ransley wrote:

Running 1/2" pipe is to small...

I disagree, but the pipe could easily be larger.

... what about water collecting at the low point

The pipe would go to the top of the water heater, then back down through the
3" vent. Water would condense in the downward path and leave via a pinhole,
but it wouldn't condense on the way up, because of the higher temperature.

Nick