Never use water from the hot tap for food or beverages. It isn't safe. There can be micro-organisms from the water heater and there can be heavy metals from the pipes. It isn't intended for drinking or eating. Just heat some water from the cold tap (or your water filter) in a kettle or saucepan.
A lot of this stuff comes from companies in the business of selling home water filter and distilling systems. And from people just guessing and answering questions on Ask or Yahoo Answers when they don't really know. There is, in fact, one caution about consuming water from the hot tap, which I'll talk about at the end.
A water heater is lined with glass or ceramic. No significant exposed metals in the tank.
The material that is precipitated out in the tank is primarily calcium and magnesium. And of course, having precipitated, it does not go back into solution. Plus, they are essential elements for humans and might or might not be a good or bad factor in heart health. Studies are inconclusive and in conflict.
The water is still chlorinated and therefore still effectively protected against most organisms. If you don't have faith in the effectiveness of chlorination, you should certain not drink the cold water, either. Ask and water department worker or firefighter what comes out of the pipe when you flush a water main.
It would be a very rare home that had lead pipes. They are iron, copper, or PVC. The 1986 Safe Drinking Water Act as amended in 1996 (USEPA, 2000) banned all lead plumbing solder and pipe and all brass containing more than 8 percent lead. If you have lead pipes, don't drink the cold water, either. If you're worried about some difference in how readily hot and cold water leach lead, why are you still living with lead pipes and fixtures?
Water heaters should be set to at least 140F. If you set yours to 120F, you are just challenging the chlorination to handle an good breeding temperature for many organism. This is not an issue of domestic hot water being unsafe. It is an issue of a consumer misusing a piece of equipment. Just because you set it to 120F to make it safe for children to expose themselves to unmixed hot water doesn't make it a proper use of the water heater. It's just an easy way out to avoid the proper solution, a temperature control at the water use point.
Make your own decisions, but know why.