I am having almost the exact same problems with my '93 4.0 v6. i am quite certain it is air trapped! with my old thermostat, the temp gauge always stayed in cold. so i assumed it was stuck open. i changed it and it was stuck open. i put in a napa thermostat and the temp gauge climbed up into normal and then always fluctuated between hot and cold. sometimes rather quickly....like once a cycle. someone told me about the air bleed. the napa thermostat did not have one (thanks napa) so i changed it with a genuine motorcraft with a bleed. that was last weekend. i've filled the system a couple times and it stilll "cycles". it must be that there is a bit of air in there yet and when the air comes in contact with the sending unit, the unit reads cold. sending units read water a lot better than air. So i'm hoping it works itself out but i've driven it a lot and so far it has not improved one bit. i'm sure it's air related because it never did this with the old thermostat and that's the only thing that i've changed! i will keep you posted. KS