When I first got my engine together I was chasing a problem where when the engine would reach operating temp (180 degrees) the thermostat would open the temp gauge would immediatly drop to about 150 degrees and steadily climb back to 180 and stabilize briefly. Then it would continue to climb quickly as I was running down the road past about 210 then drop to 160-170 and start the cycle over again. I was baffled. I began a part replacement regimene. First and formost the water pump was
fresh from parts house, no need to look there (I thought) changed thermostat, flushed radiator, then had it rodded out, checked coolant mix, added Redline redwater wetter. I was also at the time running a Moroso reduced diameter crank pully, with a standard diameter water pump pully (v belt type). I changed back to the standard crank pulley thinking that might speed up the water pump, which it did. I put up with this for several months, asked questions and never got any viable answers, I even removed the thermostat and put various resrictor washers in its place to no avail. It turned out to be the damn impeller on the water pump. I run the early aluminum pump with the outlet on the passenger side and no backing plate on the pump itself. The first pump had a stamped steel impeller, they are used in many applications but aren't very efficient. For some reason I was made aware (can't remember who told me) that the OEM Ford pump for that application had a cast iron impeller with very nice curved blades on the impeller. The water pump must have been cavitating. After installing the Factory pump I have not had a bit of problem. The pump on YOUR engine may not be made for the timing cover that you are using. I believe ALL the early 260/289 had the water pump inlet on the RH side. I think the change to LH intake was with the cast iron pump. The pump itself is deeper with a plate on the back. The timing cover for the Real Hipo 289 was relieved about 3/4-1" where the water pump bolted on. The pump itself has no cover on it and the impeller sticks out the back so it fits almost flush against the back of the relieved area. The reason for the change was to eliminate direct contact of the coolant with the aluminum in the water pump cavity. Poor maintainance will allow corrosion to eat away the aluminum in the cavity thereby allowing coolant to pass directly into the area where the timing chain is and into the
oil (Not a good thing!)
Suggest you check to be sure timing cover and pump being used are compatible. My guess you will find a mis match. But take it from me it is easy to overlook something like this, and somewhat difficult to trouble shoot.
Let us all know what you determine to be the cause. You should be able to run a 289 in 110 degree heat in town or at speed without ANY heating problem at all.
Best of luck
Rick........