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The thermostat shuts off the main burner.The pilot light gas is controlled by the thermocouple which the side of the pilot flame has to envelop. If the flame is too small or too far away from the flame, it shuts the gas off to the pilot. The thermocouple generates a small voltage which keeps the pilot gas open. It can over time fail itself, so look at replacing it. The thermostat sounds like it's failing too.
Leaking propane is red flag #1 and fire hazard. Immediately update your insurance and then turn off gas. If pilot is not staying lit, then gas leak can be cause of pilot problem since pressure on the line is reduced. Other causes include bad gas control valve, air in the gas line, bad thermocouple, burner parts need cleaning, or all the above. After fixing leak, replace thermocouple, clean combustion chamber and burner parts, and bleed gas line to remove air.
Have you checked back of water heater for proper valve positioning? (by-pass may be on) Cold water enters through bottom fitting and hot comes out the top. Any valves in between should be closed and any valves going in bottom and out top should be open.
If possible, remove the pilot gas assembly and clean the gas jet and thermocouple - they can get carboned up and stop working properly. Make sure the pilot flame and deflector is aimed properly and making the thermocouple glow red hot. If the problem persists, you may want to replace the thermocouple and also check the propane regulator.
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