I still don't understand the hose coming off the radiator that is cut and plugged? Doesn't it go to the heater core? That cut / plug isn't factory. The plumbing is suspect to me.
I took the dying 350 out of my 94 GMC Sierra 1/2 ton and dropped in a 454. I initially bypassed the heater core due to not having hose on hand during the swap. I just hooked it up a few weeks ago and used that port you have cut and plugged to go to the heater core. I have hot heat and my aftermarket temp guage shows I get up to temp. Different engine, but I still think that hose needs hooked up