Thanks to everyone for your input.

Now I am wondering if I did any permanent damage to the hot water
tank. It seems to be OK.

Also, in response to the question regarding the plastic fittings - I
used copper nipples coming off the heater. The plastic pipe (pex) is
6" from the flue. The plastic that melted was the escutcheon like
grommets between the shell of the heater and the factory installed
pipe nipples.

Thanks.