Whilst crossing all my fingers and touching wood I can now say job done.
Replaced thermostat and engine temp sensor with known good units from my old 1.6 engine....plumbed in the Rover 25 bypass and vent circuit and engine is now running fine, coolant temp and flow behaving....all seems well.
Just need to get some miles on it now to build up confidence and iron out any other niggles.
7250revs red line is fun
Rich