The entire horizontal line between l & h represents varying degrees of normal operating temperature on a properly functioning stock gauge ranging from approximately 160 to 200 degrees with dead square in the middle as optimum. As rk alluded to, the stock IH gauges were only designed to give a broad generalization of whether things are normal or not. They were never intended to be accurate system measuring devices. I've also noticed that the ic 392 I swapped into my '74 sii does run a tad warmer than the 345 it replaced, but certainly well within what is considered normal operating range. The other thing I've noticed is that the 392 creates what I perceive to be considerably more residual under hood heat, which is magnified by the tighter engine bay and smaller heat exchange capacity of an sii when compared with a f/s pick-all. This is likely one of the main reasons why the propeller heads at ihc opted not to offer that power plant in the sii platform even though the external dimensions are identical between it and the 345.
If you would have posted up about which thermostat set point to use for your engine, I think you would have received the most votes for the rs-370 in 195 degree flavor. Don't panic about the 180. It will work alright for you, but down the road you May want to bump it up to the 195.
You need to invest in a low dollar infrared thermometer. They are an invaluable tool for inspecting and diagnosing cooling system function issues. By taking measurements at various points along the coolant path, you will see quite a range of temperatures which is quite normal for the most part.
