I have my temp sending unit on the rear of the Edelbrock RPM heads. I have alway felt that the temp spikes were because the alum soaks up the heat faster than iron. Also at the rear of the heads is supposed to be the hottest part of cooling system.
I also have a sender at the thermostat housing but it turns out it is wired differently so I have not used it.
The thought that there is steam forming around the exhaust is interesting. I have a regular coolant loss problem that I have been chasing for 3 years. All the minor leaks have been fixed and I have a larger coolant recovery system. I think the higher pressure cap may really be the answer. Ceartainly worth a try as crusing season is knocking on the door.