My '88's temp gauge does exactly the same thing, and like yours the actual coolant temperature appears to be fine. Haven't found a fix yet, but changed the stat and radiator because the rad was leaking slightly anyway, and this made no difference. I'm surprised that nothing you have done has made a difference -- is the wiring the only thing left to investigate?

I'm considering forgetting about trying to fix the gauge and fitting a TM2 temperature gauge and alarm, using one of the thermostat housing bolts to locate the temperature sensor. They are not cheap, but I've heard that they are very reliable -- our other vehicle is a Mazda Bongo camper van, which generally have a reputation for overheating and blowing the head gasket. Lots of owners of these vans have been using TM2 gauges/alarms for years, and have reported being very pleased with them. TM2 gauges are Australian -- there must be a US made alarm that's similar. Here's the TM2 web page:
http://www.sig.itel.net/

David