A slight rise above the mid-point before dropping to a steady reading when the thermostat opens is fairly normal, but getting within a mm of the red zone is a bit higher than normal. If it still keeps doing it then some people might suggest a faulty/sticky/broken thermostat for that symptom, but in your case that's been replaced. It's much more likely to be something like an air lock around the thermostat housing.

There's a little weep hole in the rim of most thermostats. That should be at the top (high point) when installed. Also, the thermostat needs to be installed in the correct orientation with the plunger pointed down.

If the needle is going back down to normal then not to worry too much. Depending on the rated thermostat temperature you've chosen (there are a couple of Volvo standard temperatures for B230s) then the needle may or may not be perfectly straight at the mid-point.

Do a thorough flush and top it up well, making sure warm coolant is once again flowing through the rad hose once the engine is warm (I like to massage the upper and lower rad hoses to hasten air removal).

If you do a water flush (as you should) then a fair bit of water will still be left in the system after the final drain. Rather than topping it up with 50/50 premix coolant, I prefer to fill it with concentrate coolant measured to half the system capacity and then top up with water to get a true 50/50 concentration. Concentrate coolant usually works out cheaper anyway even when not on sale. Preferably use distilled water to avoid mineralization, with de-mineralized treated water being next best (some say better), even softer tap water (surface water from a rain fed source) will do fine, but avoid hard well water (ground water source) which will be heavier on the minerals and won't be as pH balanced, and definitely don't use deionized water which will quickly exhaust the buffering capacity of the coolant and start stripping metals.
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Dave -still with 940's, prev 740/240/140/120 You'd think I'd have learned by now