" Would going from 40 to 60 and then dropping the temp from 150 to 125
really have increased my capacity that much? It would be 20 more
gallons at a lower temp? Again I suppose you would have to run some
numbers.. "

I did run some numbers. Assuming the incoming cold water is 50
degrees, mixing 150 with it 3:1 gives you the 125 temp. So, a 40
gallon tank of 150 water could be mixed with 13.3 gallons of 50 degree
water to yield 53.3 gallons of 125 water.

So, going to the 60 gives you 60 gallons at 125, vs 53.3 by the mixing
approach. The other factor to consider is the heat loss through the
tank is also proportional to the temp difference. Assuming an ambient
of 55 degrees, with water at 125, you have a delta of 70 deg. At 150,
the delta is now 95, an increase of 36%. So, your gonna lose 35% more
energy through the tank with the higher temp. I think these two
together mean that unless there is some other issue, like space, the
bigger tank is going to be the better solution.