What brand thermostat did you use? Motorcraft or Stant (which is stamped Motorcraft) which have a burp hole? This engine can be tricky to purge, hence the burp hole. Some brands don't have it.
Perhaps your new thermostat is defective? Did you check that it was stamped 180 degrees? Perhaps it was a 195 boxed wrong? NAPA has the 190 incorrectly listed as OEM for the '95 & '96.
Did you replace your WP belt also? Tensioner OK?
A slipping belt can cause problems. Did you use an Autozone belt (Kelly Springfield brand)? Some folks have reported that the KS WP belts for this engine are the wrong length. I would use only a Dayco, Gates, or Goodyear. (BTW, Autozone can special order Goodyear belts & hoses now!)
If you only replaced the WP guts, & not the entire housing (Motorcraft unit), did you check the cone in the housing?
Did you thoroughly flush the cooling system w/a radiator flush product added to the coolant? If not, perhaps some crud got loosened up & is causing a blockage somewhere or got into the new thermostat. (Ideally, the engine & heater core should be flushed separately, w/thermostat removed, as shop manual recommends.) Are all radiator hoses warm?
Personally, I would not settle for a higher than previous running temp. You could drain cooling system again, & flush if you didn't already, & fill very slowly this time - I'd try that first. Next, I'd remove & test the thermostat, & replace w/a Motorcraft/Stant if it's a different brand.
If that doesn't work, I'm wondering if your engine overheated when the WP pump went & perhaps caused some problems somewhere. I've had customers w/blown head gaskets from overheating for just a few moments w/this engine. But let's hope that didn't happen!!! You would have other symptoms - no oil in coolant, no milky oil, right? But that doesn't rule out a blown gasket. Also, just had a customer w/an overheated V6 from a bad WP that damaged the coolant temp sensor.
Just some ideas.
Keep us posted.
