The thermostat is there for a reason so you want to make sure it is installed and functioning correctly. A new one with its grommet and water pump servicing should be included in the rebuild.
The yellow arrows in this photo show the entry and exit holes for water so the thermostat will know how hot the motor is running. The arrow on the left shows a restriction and passage way which tend to plug easily. If this circuit is plugged, the motor will run fine but the thermostat won’t know what temperature the motor is at and it will never open when the motor gets hot. The blue arrow shows where the cooling water enters the head after leaving the exhaust cover.
After the water enters the head, it travels over top of the thermostat covers gasket before circulating thru the rest of the head and the block before being discharged overboard. This is the circuit Frank was referring to and it must be clear all the time or the motor will overheat. Since your motor runs hot with the stat in and normal with it removed, I’m betting there is blockage somewhere in this circuit and on the six horse motors, it usually happens in the passage way between the T-stats cover and the gasket. This is common in motors used in salt water or from too much sealer being applied to the gasket.
