The small hole in the t-stat is to help trapped air to escape. Once you have the system purged it doesn't add enough flow to contribute to the cooling.
I agree with the other posters you need to measure what the temperature actually is, the factory gauge is really only good as an idicator that something has changed. Flushing the radiator at home with a flush won't get rid of hard build up. And an old t-stat could very well be sticking and not opening all the way so for sure get a new one in there.
