My engine ( 1970 250 ) had the sender in the head, between #1 and #2 cylinders. I would always see 25 degrees or more over thermostat setting before the engine began to cool off to the actual thermostat degree ( 180 ), I worried every time I set out on a trip. Once I moved the sender, the spikes went way down. I have since added an aluminum radiator and rerouted my hoses, so I gained about a gallon more coolant then the stock setup had. This also helped level the temperature.
A 3/32" hole should do fine. If you find it still worries you, try moving the sender to the hot side of the thermostat, or just don't look at it till you get down the road a mile or two!
