Well, we were all wrong!!! Just goes to show you that you can play jump to conclusions all day long and still not win.
Drained the coolant out, swapped in the new 160 thermostat, start car, bleed steam ports, get car up to temp, stat opens right at 160, fan 1 turns on at 170, fan 2 turns on at 180, car runs right to 196 and sits there, exactly like before.
Scratches head.
Small leak at thermostat housing too now.....
Drain now hot coolant....
Remove thermostat, replace gasket with old but better gasket, reinstall, fill system, bleed steam lines, check for leaks.....no leaks.
Get up to temp, same deal stat opens at 160, fan 1 on at 170, fan 2 on at 180, car runs at 196.
I have 80 degree water in the radiator at the inlet to the water pump and thermostat.....so this leads me to believe I dont have an air issue. I have a water issue.
So I hope in the drivers seat and go from the idle of 800 RPM up to 1300, temp drops from 196 right to 180 in a matter of 30 seconds.
I do this a handful of times with the same results. Clearly its a water flow/pump issue.
Swap the rear springs out to the 400's build a gheto catch can for the rear diff and head out for a spin. 50lbs difference softened up the rear a lot, going to need to do something to gain some tire clearance to stop the rubbing but it feels much more balanced.
So take the car out for a spin, cruising around, car runs 170-175 or so, perfect, right where it should be and 30 degrees cooler than before so everything is working. Stop at a light and it creeps up to 185 or so.
Its not overheating so I am not really worried about it but its definitely not pumping enough at idle. Google says others have this problem as well.
Its not at all going to affect my track day though so drained the overflow, topped off the coolant and buttoned it up.
Still need to roll the rear fenders some more, and get an alignment before Friday.
Thought I would update everyone who put in their .02.
Sean