I am not familiar with the 348 but if the water heater is trapped and can not be removed with the manifolds or engine in place the usual solution is to reach in and cut/dismantle the heater until the pieces are small enough to be removed. This does mean that an identical replacement heater will not go back in by the same route.
I replaced the water heater in my Vista 278 and replaced it with a smaller unit, the pictures are in the following thread
viewtopic.php?f=6&t=10158&hilit=hot+water+heaterI removed the outer casing of the old heater and the tank came out in one piece.
If you want to use the boat while work is in progress, take the heat exchanger pipes (the black rubber pipes from the engine) off the heater and join the ends together with barbed fittings and clamps to put the engine coolant in to a loop. Remove the hot and cold water connections from the heater and cap the ends.