Hello, First to answer your question about getting the rod out. AO Smith often uses aluminum anodes. As they corrode, they can split in half along their length. They can then splay out, essentially creating a hook that is a pain to pull out, as you’ve found. The best solution (before pulling up much) is to use a long skinny screwdriver-bent at the end, poked down into the anode port diagonally, and then rotate the anode. This allows you to catch the splayed ends and pull them back to the core wire, making removal pretty easy. That trick is for the next heater 😀 For this one, I’d put a piece of 1/2″ plywood on top of the heater, (or something sturdy you can pry against) catch the core wire of the rod in some large channel-locks and pry up on it, pulling the core wire/anode up. As the metal on the rod is already bent, I don’t see any other options. I often get the entire rod out this way, but sometimes the wire breaks off with the force.
If the rod falls to the bottom, it won’t do much as it’s no longer electrically connected to the tank. I’d still put in the right parts for flushing and do that to keep sediment and corrosion product from the rod cleared out. I’m no fan of aluminum for anodes, but they do seem to have their place as long as you don’t drink or cook with the hot (or once hot) water.