Can you see water flow in the radiator when the cap is off and the stat opens? You should see a current in there.
I put a head gasket on wrong when I was in college on a 351W. It blocked rear passages of the head. Never showed hot, but over 18 months it cooked the rear cylinder. Unless all passages are blocked I can't see it showing hot on the gauge unless gage is reading off rear of the motor.
