Thermostat housing bypass 1966

[jonzcustomshop]

my 66 60 series has this thermostat housing bypass... (the two hoses "T" off on the top of the water pump)
what is its function?
also I have another one of these that came on my 65 bus, would I have any problem using this on a small 1/2 ton truck?

the reason I ask is that the unit that I pulled off the bus is all cleaned up, and the water pump is brand new, the hoses are brand new.
where does the thermostat go? above this housing, or below it?

thanks for any insight.