After a lot of searching the web forums, unhappy with running temps or, erratic temp behavior on the L134 seems to be common. After watching mine behave badly, I think the "adaptation" of a modern pellet thermostat might need to be looked at a little harder. I was reading on another forum where someone is also seeing the same thing. He has actually calc'd out the flow between the two. There is a significant difference.
The thermostat sitting high in the housing and not in the head is also a big issue. I watched the temp move around on the gauge, while simultaneously taking readings with a good heat sensing gun. The temperature at the sensor fitting in the head reads right with the gauge. Hotter than the thermostat rating by 20 degrees or more at times. At times it is closer. The temperature at the top of the housing is right at the thermostat value. At idle the temperature change is pretty big. When the motor starts to heat up when you hold it at a very fast idle for an extended period, things get worse between the head and the top of the housing. The restriction seems to be holding hotter water behind the T-Stat in the head. I was able to get it to 200 on the head and 180 on the other side of the thermostat right at the hose connection. Here is where it gets unsettling. When you shut it off the water in the housing cools quickly shutting the thermostat down. The water in the head skyrockets. Easily getting to 210+. Pressure in the head gets extreme with no exit except that little hole we drilled (and leaky studs). Not a good situation.
I am going to call Stant and start with a Thermostat that opens a 1 3/8" port about 1/2". From there I will figure out a way to get it to fit under the housing and in the head like it was designed.