I would certainly doubt that you are 'making it up' because, although it's not something that had occurred to me, what you say is broadly consistent with what flameport has written, and also Redring's apparent view that their Powerstream instant water heaters can only be used with manual mixers.I may be completely making this up, but I seem to recall reading that instantaneous water heaters were unsuitable for thermostatic showers.
It was something to do with back pressure, the heater being triggered by a pressure sensor and the thermostatic mixer attempting to modulate or cut off completely, the on/off heater - something that a gas combi can deal with, but may cause issues constantly switching a 10kW load???
As for the mechanism/reason, I'm not sure that it can be exactly as you suggest, since thermostatic mixers certainly work with (were originally designed for) stored hot water, so cannot be reliant on any control or modulation of the water heating. On the face of it, my (probably naive) way of looking at is that if one looks at whatever is heating the water as a 'black box' which heats water whenever flow through it happens,then the mixer ought not to know (or care) whether there is a combi or an electric instant heater within that box - but it seems that is probably not the case!!
As you will have seen, flameport has posted a specification which explicitly says that there is a 'safety feature' which "ensures safe shut down within 2 seconds if either hot or cold supplied fail" (albeit I don't really understand why shut down is really required if the hot supply fails), but that is based on a minimum difference (12°) between hot supply and outlet temp. However, as I wrote to him, I'm not convinced that is necessarily unattainable with an instant heater, since it only requires there to be a 'useable' flow rate at a temp of about 47° or above.
The other thing I haven't mentioned is that Nasi Lamak (above) is not the first person who has told me that they are successfully running a mixer shower from an instant heater -but what I don't know (and will ask Nasi Lamak) is whether they have thermostatic or 'manual' mixers. If using a manual mixer would 'solve the problem', to the extent of resulting in something 'usable', that would be fine for my (temporary) needs.
Kind Regards, John