1981 300D Non-Turbo Veggie: Not enough engine heat

I've been struggling with a problem of my engine not reaching optimal engine temp under normal driving conditions (summer driving in the mountains always does the trick). On my normal, mostly flat drive to work I barely maintain 165 degrees in winter temps of around 40-50 with heaters going (which just barely keep me warm). Here are my specs:

  • Veggie system with HIH that is insulated going to the trunk, but not on the return line.
  • Thermostat replaced 3 times - 80C ratings. It seem to be working as the top radiator hose does not warm up until the engine starts to reach temp.
  • Radiator fan clutch needs replacing - will this have such a dramatic effect on temp?

This morning I decided to block the radiator air flow by 80% (used a plastic flexible cutting board that slipped right in and that is heat resistant) and my water temp reached 200 degrees and my VO reached a good 160 degrees (usually runs around 120) on my mostly flat 30 mile drive to work on the freeway. On the surface roads the temp did not increase as I expected it would. My questions are:
1)Am I missing something that might need replacing that would effect my engine temp? Is the radiator fan clutch worth the expense?
2) Is running at 200 degrees too high? I've got the cutting board rigged so I can easily remove it when in the mountains or in summer and I liked the fact my VO reached a good temp.

Thanks,
Rusty

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