Looking at an on-demand water heater rated at 240V 27A. Have previously wired 10/2 MC wire and 2pole 30A breaker on a 208V bus. Service is 3 phase into sub-panel. Do not want to re-wire, can I just upgrade breaker to a 35 amp?

No can do, 10 gauge is only rated for 30 amps. If you increase the breaker to 35 amps without changing to 8 gauge wire you make the wire the weak link and could cause a fire. Copy this chart somewhere for future use.
#14 15 A. 15 A.
#12 20 A. 20 A.
#10 30 A. 30 A.
#8 45 A. 40 A.
#6 65 A. 60 A.
#3 105 A. 100 A.
The center column is for copper wire and the right column is aluminium