I suffered overheating during a road trip but did not suffer the lose of power, though I did not push it.
I did as you did turning on the heat and opening windows. With that I noticed that the faster I went the higher the temp gauge went, so I kept it down below 50mph for the remainder of the trip.
There are things going on in the dash gauge that modify the temp reading so it does not fluctuate unless extreme and then there is the temp sensor that may not be working 100% to tell the gauge the coolant is too hot.
I found the coolant thermostat was not opening fully. Take it out and put it into a pot of water and bring the water to a boil. You should see the valve open all the way.
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1988 244 DL; B230F; LH-2.2; Manual 5-speed (M47)
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