The fact that you see water flow to the top of the rad at a temp on the meat thermo that is well below the proper t'stat temps says that the t'stat is somehow opening.... or there is some way that the coolant is bypassing the t'stat. Are the t'stats sitting very snugly in the recess in the housing? Have you looked at both the manifold AND the t'stat housing to be sure that there are not recesses in both that can allow flow around the outer edges of the t'stat?
nm9stheham, i think you're on the right track there.
It's not the heater core.
Do you have a stock radiator?