Doh, in your illustration, the mass of water is upstream from the heat source. It is not heated by the element, so it truly is insignificant. Both units would function the same.Try again.
Your question has one simple answer and lots of considering and pondering to it. Yes, the heat store would tend to level the outlet temperature. A better comparison would have the heating element placed inside the heat store. The difference between the two is known as a reactive component. Whether or not the additional reactive component is useful depends on the application.
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