Forgot about this one - my thermostats rubber gasket that surounds the movable "valve" was coming apart as well. The rubber wasn't rotten or such - almost looked like it was torn. But it definately was preventing the thermostat from closing properly.

New one went in with a bit of fidling - it is buried way down on the backside of the engine, but it is accessible if you move some of the wiring harnesses out of the way, and work carefully.