i have the same problem with my Blazer BUT i think mine is wiring issue for sure. when the original owner swapped the block and tranny they made all kinds of messes with the wiring. hell, i have two sending units! and i don't know how many amps they should be pushing nor if i even need two... but yeah, i run at hot and after i replaced the thermostat and did a flush i'm pegging past hot. whatever you figure out let me know cause i'm about to wire up a temp/oil/volts gauge cluster somewhere. attached are a few pics of my sending points:
when i unplug this one the gauge goes cold...
when i unplug this one nothing happens but when i plug it back in the guage will run to hot...