I think new thermostats are not as accurate as old school parts, like everything else these days, just poor quality. Mine does the same thing, 2 new stats and the same scenario. The gauge will rise to 180 - 185, then drop off to 170 and stay there, I block off part of the radiator with cardboard and I can regulate it quite well.
I wouldn't trust the dash gauge unless you've verified it with another measuring device.
Thermostats don't have anything to do with engine operating temperature. The engine will operate at the same temperature regardless of what thermostat is installed.
The thermostat only determines how long it takes for the engine to reach its normal operating temperature.
Take the thermostats you have and put them in a saucepan on the stove. Put a thermometer in the water as well. Turn on the heat and watch what temperature the t-stat opens and at what temperature it is fully open. A 180 T stat will begin to open at around 175 and won't be fully open until around 185.
Blocking off the radiator doesn't do the same thing as a thermostat. Blocking a radiator will raise engine operating temperature. A thermostat will not.
