Re: 2010 award for dumbest narghile design winner!
I don't think the bottle would melt. You can hold your hand about six inches above your coals while you smoke and you won't burn your hand. It'll get uncomfortably hot after a while, but it won't reach plastic-melting temperatures. Keep in mind that airspace is the best insulator.
Thus being said, this design is still capitol R-tarded, for a number of reasons. It's taking something (Nargile) which is a practical, functional work of art... The elegant result of 500+ years of smoking culture, and turning it into something cheap, kitschy, inefficient, and hardly suited to it's intended function. It is the antithesis of art, it destroys art. It's only function is to try to attract those too foolish to learn of the nargile's noble heritage away from a path of true molassed tobacco bliss. It is junk, it is awful, and I hate it.
Pretty much the same way I feel about all Chinese hookahs, but more so for this kind of chintzy, ugly, worthless shit.