I finally got a day that was warm enough to do a thorough flush of the cooling system and refill everything. Doing the backflush through the block was really good advice. I filled three 3 gallon buckets before it started running clear and it was shocking the amount of rust and other gunk that came out.
After draining, flushing with solvent, backflushing, and flushing two more times and refilling the system with coolant I ran the car for about a half hour. The temp gauge is behaving normally now, go figure.
Thanks all for the info and suggestions. The car is almost roadworthy, still got to go through the brakes and put tires on it.
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