Uh-oh. We have a no and a yes. Put me in the yes column, as well. Perhaps we need one of our famous NACHI polls.
Thats why you find sludge in fire sys.
Any air in the system and is very short lived. 
Poll away Russel.
And some nasty stinky stuff it is Henry.
Just my opinion here but for black steel pipe;
it is used for gas distribution inside and outside the house, and for hot water circulation in boiler systems. It is not used for potable water, or for drain waste, or vent lines.
http://www.keidel.com/mech/pvf/pipe-blksteel.htm
http://www.americanwaterheater.com/support/manuals/energysmart.pdf
Page 6;
Do not install with iron pipe.
I don’t think that black iron pipe would be my preference on a water heater.
How about the dielectric unions that need to be installed, hard to tell from the picture?
Marcel 
The principle involved with boilers is a process known as ‘deaeration’ whereby the oxygen in the water is liberated - usually upon heating- and is vented to atmosphere. So, for circulating heated water systems what little oxygen there is gets eliminated. Whatever makeup is required due to leakage, etc. is small enough to be of little or no concern. In medium-sized commercial boilers, oxygen is often controlled through chemical addition.
In the case of large, high pressure, industrial and utility steam-producing boilers, the makeup water first passes through a “deaerator” which liberates oxygen using steam and vents it to atmosphere. (The small wisp of steam you often see exiting the top of a large boiler plant is the deaerator vent). After that the water in the boiler is usually treated with an oxygen scavanging chemical to remove the final traces. Otherwise the carbon steel boiler tube woudl quickly fail due to corrosion
With respect to the question about foul odor in water, I believe that is caused by sulfur compounds that naturally occur in the region’s ground water and, as far as I know, has little or nothing to do with the type of pipe used.
Yes, H2S or hydogen sulfide causes “rotten egg” smell. Mostly it is in the local geology and water but I have found it occasionally from sitting water in pipes of unoccupied homes in my area- causesd by bacteria…run the water for a few minutes and the smell disappears. A “green sand” filter removes it if in the local water; a UV sterilizer is recommended if it forms in pipes since there is bacteria in the well water.
It doesn’t disappear in east Slidell, Louisiana. They’ve simply come to grips with the fact that their water stinks.
What happens to the oxygen that is, uh, part of water, them two oxygen atoms to every one of those hydrogen atoms? If one removes the oxygen, doesn’t one, uh, remove the water, leaving just hydrogen, which is very flammable (think Zeppelin)?
I have only come across i think 3 that turned flammable. and they are a bear to clean up. About 2-3 days each.
Desulfovibrio bacteria thrives in hot water in the presence of magnesium. The bacteria cause the hot water supply to smell like rotten eggs. The solution according to AHIT is to chlorinate the tank and replace the magnesium anode rod of the hot water heater to a aluminum one.