Cant help you much with your specific problem, but don't expect to much movement from the factory temp gauge. Mine doesn't move at all when in operation but when I hook up my IID tool theres quiet a range of temps from the coolant when in operation. And I agree with you that it seems stupid to have to chuck an engine just for a head gasket. 
Do you get the same issue happening when the engine is not under high load?
				
			 
			
		 
			
				
			
			
				Shane
2005 D3 TDV6 loaded to the brim with 4 kids!
http://www.aulro.com/afvb/members-rides/220914-too-many-defender-write-ups-here-time-d3.html
			
			
		 
	
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