Hi Pat,
I know where you're coming from, however it's making my head hurt...
The bypass should connect to the water pump inlet, use the upper of the two tubes. The lower one is for heater return.
What bothers me is that the entire cooling system operates at the same pressure because it's a hydraulic system. The only reasons for pressure changes is a drop caused by cooling at the rad or an increase caused by resistance to the water pump. Or by localized boiling which can happen almost instantly.
If the thermostat is fully open there should be no huge rise in coolant pressure. This tells me either the thermostat is not openning or you're getting localized boiling in the heads or both.
Something else we've seen, and this caused me no end of grief because it had nothing to do with the car was: excess silcone used on the head gaskets was partially blocking the coolant passages in the heads to the block and incredibly also on the manifold gaskets to the intake at the crossover feed to the thermostat housing. Wow, that one drove me nuts...
So IMHO you've got air in the system, no doubt since pucking out the resovoir, and your thermostat / temp gauge is lying to you. There's probably enough coolant in the car to make it seem alright but you have air in the heads and this is not a good thing unless you've got a Rotax in there
Do you have a port on top of the manifold behind the thermostat you can open, say by taking out a sending unit or pipe plug? I'll bet you'll find nothing comes out of that hole when the engine has cooled overnight. There's your problem. When the header tank is full enough and there's no air in the system, you will get coolant out of that port, lot's of it!
The bypass still has to be sorted and the bottom of the header tank should "T" into the feed line of the heater in the right rear sill. No fun to get at, but that's where the union is.
Hope that helps Pat. Warming up these cars slowly really counts too. I mean ten minutes should do it. The radiators a massive, you should have no problem keeping the temp down.
Cheers