My weird temp sensor mount

The radiator location will be just fine. Coolant temp there (at the outlet of the top rad hose) will be extremely close to coolant temp at the cylinder head sensor location (at the inlet of the top rad hose). There will be no dilution because that's where the coolant enters the radiator from the engine. Being on the other side of the thermostat from the original location, it will change the behaviour of the temp gauge a little: you will be able to see the thermostat open because the temp gauge will more suddenly swing up from the cold peg.

Another option: drill and tap the water outlet/thermostat housing. Attached pic is from an article by Doug Dutra in the March '92 Slant-6 News.

Me, I'd probably either use the radiator location or drill out and retap the cylinder head hole. If you do the latter, put a strong magnet under the hole to catch the drilling chips.

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