Hey Steve ol' buddy,
We used a Black Cat catalytic heater on our trimaran. It did a fine job, but we used it in a very specific manner - to heat the cabin at night before bed, and then again in the morning to warm things back up. (In between, my preferred heating method was body heat... but that was due to the Blonde... your situation with Sydney onboard may not be as... um... er... well, it will probably be hairier.

) We would put the propane canister out in the cockpit for the night (the floor of the tri cockpit was above the waterline and vented). Since getting Wild Blue and having a Wallas, we are spoiled by the ease and function - and the ability to safely use it during the night when necessary.
I don't know specifics on the Mr. Buddy, but it is a similar (even better) concept than the Black Cat. The Black Cat said it could be used indoors or in a tent, but to allow some fresh air circulation. As the others have stated, my concern would be more about the carbon monoxide situation. With your rear curtain rolled down, there should be little problem with gas fumes; if you just put the canister outside when you're done using it, I wouldn't think there would be a hazard.
You just KNOW it's going to be warmer and more comfortable than sleeping on Gizmo with no rear canvasback when it was freezing cold at Lake Powell. (This guy is tough - we invited him to stay with us on Wild Blue, but he declined... probably had something to do with the fact that we told him he'd have to share a bunk with Molly.)
Put a CO detector on the boat - we want to keep you around for a long time... even if your wife figures out the boat switch and sends you packing.
Best wishes,
Jim