TOPIC: Cold water, then hot water, then cold again on all cold side faucets

It would be cheaper and less troublesome to put in an expansion tank then mess with check valves.

A significant amount of hot water will leave directly from the hot water heater into the cold water supply piping until the pressure equalizes and water can begin to flow through the pressure reducing valve.

Coldwater - hot water - Coldwater …
Does this make sense?

Yep, that's a good description of the possible cause of the problem.  If that is the case, Mike's friend must be exaggerating the amount of hot water coming out.  I can't see 2.4 gallons of hot water backflowing into the pipes just when the flow of water is shut off, and Mike said it happens when the water sits for a while.  But...   as soon as I say 60 seconds of hot water out the cold side doesn't seem possible, it will be.  

I hear ya!

Is there a "tempering valve" installed that possibly became defective, or is installed improperly?

Hello Guys:  I have been cancelled to visit my buddy's house twice since I last posted.  However, one point I wanted to tell you was, I had my friend lower the temps on both water heaters to the "normal" setting, and bleed the lines at each faucet in the house before going to bed.  His opinion was that helped a lot, but upon talking with his wife, she said there was no difference.  So I continue to wait until their schedule bonds with my schedule and I can get over to their home for a look.  Thank you again for all of your comments thus far.

I'd put my money on the wife. They're the temp experts. 

Just another possible cause I have run into out here in California, mostly in multi family. You get the same described symptom, cold, then hot, then back to cold. In the cases I have been on, it has been because of the disk in the pressure/temperature compensating shower valves get stuck. The plumber fixed it by removing the disk and shacking it until you could hear the mechanism rattling inside. When they get a bit of corrosion or a piece of grit- they act just like a slow leak between the hot and cold side.

Additionally, the problem might show up in one unit but be caused by a shower valve in a different unit.