The wall damage was indeed deep and bad, to the extent that the sheathing board under the tile surrounding the bath tap was soft enough to push a finger through. Fortunately the mould was confined to the wallboard, grout and caulk, and the studs underneath are healthy.
The mustard-yellow bathtub, the crappy painted ceramic tile and the Canadian Tire cabinetry have all left the building, and the bathroom has that unmistakable look of a bombed-out bordello.
Mr Google tells me that my water heater is almost certainly suffering from a surfeit of lime scale, no surprise there. So a visit to the cellar to empty the bucket is now a daily event, until the bathroom project has reached the point where there's room in the house for a gas-fitter down below.