Kstretch, Go out and look at your car before you type! If your theory was right why would the thermostat hose go to the bottom of the rad? Run your car and put your hand on the hose next to the thermostat. You will find it never gets hot. The hose on the top of the engine will get hot because THAT is the outlet, NOT the bottom one where the thermostat is! The INLET to the water pump IS JUST ABOVE THE THERMOSTAT! Check it out!
Camelwagon, Your heater core is just passing enough water to make the hose hot but not enough to make the thermostat work right. Go out and bypass the core. Might take you 10 minutes! It wont cost you a dime. What have you got to lose?