This subject comes up a few times a year. There IS a reason for the thermostat and one should be used at ALL times. Flow is good...but too much flow can result in over heating.
The thermostat serves basically 2 purposes, 1. on a cold engine it keeps the coolant in the block so the engine can warm up quicker. When the coolant reaches "somewhere" near the thermostats preset opening of 160, 180, 195 degree's it starts to open and then allows the coolant to flow through the radiator and back into the engine. A warm engine is a happy engine!!
If you remove the thermostat the moment you start the engine the water pump sends cold coolant through the engine causing excessive warm up time. 2. "flo" ....you want the coolant to flow but not too much, thats what else the thermostat does, it restricts flow so the coolant can stay in the radiator long enough to be cooled down as it passes through.
Your problem is probably a bad radiator cap, a lot of guys use just a generic 7 psi. cap. If you have a well built brass/copper or aluminum rad. you should be using a well made 16 psi. cap. The best place for your temp. sender is probably in the cyl. head....if you can install it there w/o a wiring problem. Or as you said install in one of the ports near the therm. housing.