On our diesel Universal marine engine, moving the water heater from the "in series with the heat exchanger position" to the Thermostat by-pass made it possible to go at the boat hull speed continuously..
Above are the steady state temperatures at various speeds before and after the changes. The original red line is with the original 3 GPM Oberdorfer. the blue line after the 6 GPM Sherwood was added. The green line is after the water heater was moved. Westerbeke calls this the "positive flow, hot water heater connection in the thermostat bypass circuit"
For details on moving the water heater click here. For an itemized list of overheating causes click here .
Click here for a description of four different types of water heater connections. I went from a type 2 to a type 1 and got this dramatic improvement.
Click here to see the incredibly low rate of temperature rise in an engine with a thermostat that has the two holes in it.