I am using the Rinnai heater as you do.
If it gets too hot, you can reduce the gas supply (yellow handle) and increase the water flow (turning knob) to max.
The heater requires a certain water pressure to ignite itself. If you turn the mixer too much towards the cold water, which means reduced water pressure to the heater, the heater will stop burning. So there is a kind of cutoff point on your mixer. this explains why you got cold water.
finding a sweet spot on old Rinnai is difficult in sizzling hot Singapore because it is designed for cold countries. The new design with digital control could solve the problem.