Thanks we really like it. I really think it is the best of both worlds between saving water and natural gas.
Yes the recirc loop returns to the cold water side of the heater. I have a back flow preventer there so it only takes the path when the pump it running.
The aquastat installs over a copper pipe and mointors the water temp once it warms up past the set point it will take away the power to the pump. So this would work for your setup also it would turn off the pump once the water reached the aquastat temp once the water cools back off it will put power back to the pump.
This all works independent or over rides what my automation tells the pump when the water is hot.
No sense running the pump if the water is hot.
This is a good read it is more on rentals but it applies to us also.
Home Energy Magazine :: Money Down the Drain: Controlling Hot Water Recirculation Costs