Yes, a double gravity loop will work; it may not be temperature balanced (5-10 degrees difference) but it will work. It is difficult to "feel" the small difference and, if it is warm enough to start your shower immediately, it doesn't matter.
The insulation is important because, without it, you are heating all the water in the lines and the air surrounding the lines all the time. That would make your water heater run at least 1/3 more than it does now; you would save water but loose a lot of energy. I recommend using closed cell foam insulation, (Armaflex and some other brands) which can be obtained with one side slit for the full length, you spread it open and place it over the pipe, pull the paper tapes out and press it back together (it already has glue on it).
As for the expansion tank, do you have one now? Do you have a backflow preventer on your house supply line? If you answered "no" to those questions you have no need for an expansion tank at all. When the water in the tank is
heated it takes up approximately 2% more space, therefore the expansion tank is used if you have a backflow preventer on the supply line. Otherwise, the expansion would have to go out through the Temperature and Pressure Relief valve. Hey, let us know how it turns out.