Stand behind the engine with the cowl off and follow the pee hose from the outlet back to the origin. Does it tee into a hose that goes down below the block and going the other way go up to the left bank stat and then on over to the right bank stat? Does your popoff valve get fed from a hose coming from atop the engine and goes down below the block?
If you are plumbed like I said, the stats have to open before you get any pee. And as the engine is warming up, especially when the ambient water temp is cold it will pee and stop etc. as the block is coming up to temp. Pellet should be stamped 143 for 143F opening temp. The popoff is set to unseat due to water pressure at 2500 rpm and is there to increase the available water flow with increased rpms.
Just second guessing, you lost pressure when your popoff unseated. What's confusing is that you said that you had the hose clamped off.....maybe not. Maybe you had the wrong hose clamped off. The change from 20 to 12 was the first stage of unseating and the rest was it wide open.
With the popoff open, the flow through the engine, considering a reasonable ambient surface water temperature, should be such that the stats will close down because the flow is such that the water exchange through the block is faster than the BTUs of heat put into it caused by the engine firing heat.
Couple of things. You should have an over temp alarm on that engine with a sensor on the right bank as I recall. Output is a tan or tan with a light blue stripe which exhibits a ground when the block internal temp hits 195F. You might follow that wire to the bayonet connector, pull it apart, and with the ignition key in the on position, stick a wire in the control cable half of the connection you just opened and ground the other end of the wire to a non painted spot on the engine block. upon doing that you should hear your warning horn blast a solid blast. If so your OT system, other than the sensor, is working as it should and you are protected. If you want to check the sensor too, pull it out and put it in a pot of water on the stove with a candy thermometer and test it for a short between the wire and the case of the sensor when you get up to 195 thereabouts on the thermometer.
Second thing is to get back out without the popoff hose clamped and run your engine at WOT for a pressure, pee stream, and temp check. If you are worried about overheating the engine, with the cowling off, punch out of the hole and run for a couple of minutes and shut her down to idle and immediately get back and feel the top of the block. If you can keep your hand on it you are fine.
For reference, 143F is very close to the temperature of a domestic US hot water heater set to the Normal position. So, before you go, turn on your hot water at home, let it get to temp and feel it. When I was working in industry, 70 Centigrade was the can't hold you hand on it reference point. 70C is just under 160F.
HTH,
Mark
