Richard,
Theoretically, a water pump bypass hose serves two functions: it promotes quicker warm-up on cold-start, and helps prevent water pump impellor cavitation. However I don't like them as they are another area for possible leak and make installation of the intake difficult at least for my 427FE also once the thermostat is open they allow some short cycling and they don't adress the "cold slug" issue with our rear engined cars.
There are two workarounds that should let you slide by without connecting the bypass hose. A) By means of 3 1/8" holes in the thermostat that will allow some water flow even with the thermostat closed (one 1/8" hole is not enough, OK for venting but not for flow). B)If coolant always circulates through the heater core whether the heater is on or off but, this is not the case with our cars as there is a servo valve that allows infinate control of the water from the intake manifold through the heater core so this path can be shut off if the door control is in the "no heat position" and the servo has or is shutting the valve.
Enough theory. What I do:
When I first got the car I noticed that during warm up the temp would come up to 90C (about the opening point of my 180F thermostat) then fall back to 80C then quickly rise to 120-130C or so and quickly fall back to 80C and go through this cycle a few times. What was happening was the thermostat would open then a cold slug of water from the distant radiator would enter the engine and the thermostat would close, then the engine would warm up again and repeat untill there was thermal equilibrium. Even though the temp extursions wern't really bad I didn't like the idea of any thermal shock so have developed the following cold start up proceedure:
A/C off, door heater control in "MAX HEAT" position opening the servo allowing water from the intake manifold through heater core to the radiator and back to the engine. Using this proceedure water is flowing through the radiator as it is heated in the engine, thermostat opens at 180 and stays there; there is no temp excursion or thermal shock. Once up to temp and thermostat is open I turn the door control to "min Heat" position and A/C on unless heat is wanted. So key is door heat control in "max heat"...wide open during cold start.
Steve
PS If you have installed a shut off ball valve in the heater supply line as I have to maximize A/C performance as the heater servos do leak by a little then insure it is open and after warm up when you are checking the engine compartment before taking off shut it.