The part is in fact the heater control valve. The new ones sold by FCP Groton are all-metal and won't fail like the originals. This is a really common 740 problem. Every single car out there should have a new valve in it by now. It's standard practice to replace it if the car has had any other cooling system failure, because it will be next to go.
As Kenric noted, it isn't expensive. And you are correct, that you can go a while without it, you simply have the heat on full if you put a piece of open pipe in there. Good thing you were paying attention to that needle- you saved yourself several hundred dollars worth of head gasket work.
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Rob Bareiss, New London CT ::: 86 244DL, 87 244DL, 88 744GLE, 91 244: 808K total
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