Has anybody used a different valve and mounted it in the engine compartment? I need to replace the one in my heater and thought it would be easier to change if it ever leaked again.
I use an "in line" valve to control the water flow through my heater. I have the "heat" control of my 57 GMC deluxe heater control connected to it. Typical use is to cut open the heater hose that supplies hot water to the heater and insert the valve. Typical cost is around $10 at FLAPS. Valves can be found in "push to open" and "push to close". I've seen them that fit 3/4" or 5/8" hose on both sides as well as 3/4" on one side and 5/8" on the other. Some are plastic case, some metal. If your parts person can't figure it out, ask him to let you look at his (I think Wagner) book that lists heater valves. You'll find what you need in it. If he doesn't have a book, you are in the wrong parts store.
In my case (GMC V8) the "hot" heater hose passes about 4 inches below one of the rods that run from firewall to radiator. I used a larger than needed hose clamp for one side of the valve and after tightening it formed a hook from the extra tail sticking out of the clamp. I hung the hook over the rod and had an instant mounting place using no screws. Or better yet, mount it to the inner fender well as you suggested.