the hole is only for getting the thermostat to open early, and over heat and then open. the hole is not to control the temp after its warmed up. Due the thermostat being on the intake manifold, the engine can get very very very hot and the themostat will still be around cold water. the very small hole the side of a pencil lead, will allow the warming water to move toward the themostat quicker and have it open correctly, and not after the engine has over heated. If the top of the tank reads 180, the gauge should be in the middle. or just to the right of middle. your gauge is off a bit. If your thermostat is a 180 themostat and your reading that temperature in the top of the radiator tank, then you can take apart the gauge assembly and carefully bend the gauge needle just a bit to the left so it shows correctly.
or you can try to find a replacement gauge.
200 should be close to red. 220 should be at edge of red.
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