Re: Is anyone 100% positive that a 1982 Mercury 70 hp does not require a thermostat?
Seconded no T-stat on your motor.
The early 70's 650's (65hp 3 cyl) were essentially the same block, but without even a place for the T-stat or poppet. About 1972/73 to 1975/76 in the 65/70hp's they modified the castings and added the T-stat and poppet. After about 1976 in the 70/60hp 3-cyl's they deleted the T-stat and poppet, but kept the same block and cover castings with the spaces for them. (My guess is powerheads were overheating; I would not add one)
If water is on the plug inside the cylinder, sounds like water is probably getting into your cylinder. Apart from a crack in the block (or a cylinder completely corroded through), two places I can think of that can happen:
1) Exhaust cover/baffle gaskets or corroded-through baffle plate (sounds like you're addressing this)
2) Exhaust plate gasket bad, letting water into the chamber at the bottom of the crank, then leaking in through the lower crank oil seals (unfortunately, gotta pull the powerhead to address this one)
If water is on the plug outside the cylinder, you probably got a leaky rear cylinder cover / gasket.