Hi Trey,
There are (at least) two other causes for overheating on a CC motor of this vintage, and the common causes are clogged open pressure regulator valves, and slipping drive belts. The slipping belt will probably be noticed with a squeel at least now and then, and the pressure regulator valves are a problem if they are stuck open while the engine is running at low speed, because the cooling water is being short circuted and not pumped through the motor.
A net impeller on a pump with a bad internal cam profile can also pump less water than it should. Now you're motor is pumping water, presumably the same as the other motor, so the water pump issue seems to be mute.
A thermostat can get stuck just as easily as the pressure regulator valves, and I would think a good soaking with something like CLR would loosen things up. Since thermostats rarely actually go bad, yours probably only needs a cleaning with a wire brush and a decalcification. You can put one in a pan of hot water, raise it to a boil, watch to see what happens; if it opens and closes with the change in temp, it's probably still good. As for the temp, I'd think the 160 is the way to go, since 160 is the preferred operating temp for the raw water (no heat exchanger) setup. The heat exchanger models may even have a different t-stat, and if you find out about that, please post the info here for others. (thanks)
Here is a thread showing two prime sources for the 427 thermostat. These may no longer be available new, and may only be available from those wonderful parts recyclers out there, who help us maintain these vintage boats.
http://www.network54.com/Forum/424840/message/1191628881/
Here's one of those pesky pressure regulator valves.
Here is the thread with lots of photos
http://www.network54.com/Forum/424840/message/1164411296/
Here is another photo of a pressure regulator valve, just to show the kind of crud that can collect on one of these all brass devices. Same thing can happen to the t-stat, and since they slide in a housing that is more controlled than this, it's quite possible it could be stuck or clogged somehow with debris. One way to tell, pop it off and take a look! (A lot easier said than done)
Here is a previous thread on "overheating" that may be of some use to you or someone else with overheating issues.
http://www.network54.com/Forum/424840/message/1187132102/\
Regards,
Paul