[rich weyand]

Which head gaskets did you use? They could be blocking the internal bypass.

It is basically overheating locally until the thermostat opens, and that makes me think about the bypass. The bypass (internal or external) allows coolant to circulate within the engine when the thermostat is closed. Though the heater should be functioning as a bypass as long as the heater hoses are connected to the right spots and there is no shut off in the heater hose lines.

Post a pic of the heater hose connections on the engine end so we can see what you got there.