Not trusting an electrical temp gauge. So how would one test to find out if its the sending unit or gauge that's at fault? Hate to waste money on the wrong item. And for me Murphy's Law would require the wrong purchase first.
I had a similiar problem with my temp gauge. I went the route of a new sending unit and found the problem remained. I ended up buying a radiator cap with a mechanical temp gauge built in. Once I had found that the over heating was NOT happening, I tried running a wire from the sender directly to the gauge . BINGO. I put my old sender back in and rewired the gauge. It turned out the covering on the wire had been chaffed and allowed moisture in causing a short... Check the easy stuff first. As an added note, I also picked up one of Sears digital temp units. It helped a lot showing that the engine wasn't burning itself up.
Could prolly remove the sender from the motor and extend the wires to be able to put in a pan of water. Stick a good thermometer in the water and warm the water with a propane torch. Compare the two..(now this get skinda funky as I think most dash gauges work off of current) Older Ford Lincoln and Merc temp gauges read HOT when the key is not on so if your gauge reads hot with the key off follow below; if not reverse below. If a Ford or Merc and the temp gauge reads low put a variable resister in the wire between the gauge and sender. If a Ford or Merc and the temp gauge reads High put a variable resistor between the sender and ground leaving the wire between the gauge and sender intact. In either case dial the pot until the gauge matches the thermometer. Disconnect pot and measure resistance. Go to Radio Shack and match the resistance of the pot with a 1 watt resistor and wire it in.
This might provide some ideas. http://www.madelectrical.com/workshop/water-temp-gauge.shtml With some jumpers you could hook up the questionable sending unit to a car that has a good guage.
Do you know what thermostat is in it? If so, simply crank it up and watch the gauge climb, then when it quits climbing, indicating the thermostat has started to open, feel the top of the radiator and ascertain that it is starting to get warm. Close enough.
With the key on, disconnect and short the wire at the sender, that should peg the gauge. If the gauge doesn,t go to full hot, the gauge or the wiring is the fault, if it does, replace the sender
You can put the sender in a small pot of boiling water and see if the gauge reads 212 degrees F. You will need to run a jumper from the outside threaded barrel of the sender to ground to complete the circuit if it's a one-wire sender that normally grounds to the engine block. If the wire leading to the sender is old and crumbly, fix that first before you waste any more time, in case it's just that the wire isn't making a connection anymore. Wires that run along the engine usually take a lot more abuse than other wires in the rest of the car due to the heat of the engine and the vibration.