160* is not hot enough for an engine to live a good long life. hard to tell from my monitor but it looks like cylinder bore wear at 160* is possibly double that of running 200*
your cooling system is capable of maintaining 180* in traffic if all your wires are connected, it will maintain any T-stat rating above 180* at all times
FWIW it's easier to tune for a steady operating temp, these old mules don't enjoy the benefit of computer controlled EFI & spark management so basically it's impossible to tune for a widely varying operating temp. also, I've found that my 351C's always run best to the high side of the temp gauge
you think you may have a stuck T-stat, do you know what rating is in it or if it's the correct type with the restrictor plate in place?