My experience has been that if the cooling system is operating correctly, I read about 5-7 degrees higher than the thermostat rating right at the coolant temp sensor. I also generally read 10-20 degrees cooler than the thermostat rating at the tops of all the head bolts.

You definitely need to take readings while the car is running. Especially on a hot day, the engine can warm up quite a bit sitting in its own heat after idling.

I've actually gotten very good results from running higher temperature thermostats. I used to run a 160 F thermostat that came with the car when I bought it. The temp gauge would always read 20 degrees to the left of vertical. Then after going through then entire cooling system, I switched to a 195 F thermostat. Now the gauge reads perfectly vertical, and only slightly higher at idle. The engine seems to do fine on some of our hot 90 degree days here in Oregon, and I think it runs much better at that higher temperature.