Yeah, your taking the temp from the right place. And your piston is going to be tight for quite some time with the new engine.(good thing...trust me) It just shouldn't be making those kinda jumps in temp with only 1/16 turn changes.

I admit, I'm no expert on this stuff. I'm still watching every move the local engine gurus make so that I can learn all the tricks of the trade. So I might have told you everything I can.

The only other advise I can give is to find someone you know and trust who knows engines and ask them about it. Best case, if the person can actuallly be with you while your running the engine.