By looking at your signature and at the direction my friends' cars and my own have gone (mod wise), I'd recommend getting a new 3-row radiator for your ride. One friend of mine had his gauge up to the 2nd from the top mark every time we'd ride. Now with the 3-row he's had nothing but cool temps, as in the 160-200 range. That's with a 197* thermostat, too. They're about $150 at AutoZone, brass/copper construction, and have a lifetime warranty. Nice gloss black finish, too.
Just go with the 197 T-stat, replace the cap (should be done every two years or so anyways, along with a flush & refill of fresh 50/50 coolant mixture), and if you're still stuck, get a new radiator. You're looking at a radiator that's over 10 years old, anyways, so if nothing else replace it just so it doesn't leave you walking one day. Don't even bother with a crappy 2-row, they ain't worth it. Leave those for the 6-cylinder Fairmonts.
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Capri306, Moderator, The Mustang Works Online
1979 Mercury Capri, 5.0L -- C4 -- 2.73
1987 Mustang LX Notch