When I look at the picture of the 261 with the bypass hose going from the water pump to the top side of the thermostat, I don't see it the same way as you do.
What I see is that there is water circulating around the closed thermostat via the bypass hose from the water pump, sending water to the radiator via the upper radiator hose. When the thermostat is closed, it cannot send any water back into the engine via the bypass hose. It all would go to the radiator upper hose.
Carl
The Bypass T-stat is very tall and it only closes off the actual radiator hose outlet in the upper housing. The coolant in the lower part of the upper housing is on the high pressure side of the pump. If the radiator outlet is closed the coolant bypasses back to the low presure side of the pump.
I only find evidence the "16 hole - open bypass" T-stat was used in 1962 (261) and again in 1964 (292 & 348).
Mike B
