All the thermostat does is get the coolant temp up to the specified temperature before letting the full cooling system go to work. As an example, the factory issued thermostat for my 1970 GTO was a 195 degree unit. GM engines from the period can and do run warm with operating temps as high a 200 - 205 considered normal. Most modern engines (at least in the GM camp) that run electric fans, the fans don't activate until around 220 degrees. Pontiacs being the critters they are, it's good that the builder knew enough to clearance the water pump separator plate. Without looking, we don't know how close he actually got it. In my case, for example, I got the plate to impeller clearance down to about .050 without using a gasket. That way, when I assembled it with the gasket, I was assured there would be no physical contact while having the best flow possible.
Yes, there is a difference in performance between the stamped and cast impellers, but as long as the separator plate is clearanced, and the transfer tubes & o-rings are in good condition. coolant flow should be adequate for the task. Freshly rebuilt engines do run a little warmer during break-in but, in your case, I would agree that 235-240 is excessive and some sort of action is called for.
All else being equal, the coolant temps one sees are influenced by either cooling system capacity and/or air flow. So, let's look at those. Let's assume that your stock radiator is in good condition and the appropriate model for your car. If your rebuilt engine is the same size as before (except for any over-bore), capacity should be adequate. This leaves us with airflow.
In my opinion, there's no substitute for a good 7-blade clutch fan coupled with the factory radiator shroud. Such a setup pulls air like crazy. The only other thing to consider is any air that may be getting around the fan/radiator somehow. For example, my GTO has a cover plate that bolts to the radiator core support and covers the area between the core support and the back of the Endura bumper. This forces all the air coming in through the grille to pass through the radiator and not come over the top by the latch and escape into the engine bay.
So, the items to check are: 1) water pump and separator plate clearance. 2) Water pump transfer tube and o-ring condition. 3) Appropriately sized radiator in good condition. 4) Quality clutch fan and shroud. 5) Sealed air flow channel forward of the radiator to the grille openings.
Regarding the radiator overflow. Once the temps are under control, this should not be an issue as long as the radiator is filled appropriately. Most cars of the vintage like yours and mine did not use a coolant overflow catch can. Instead of topping off the radiator, the factory manuals show that the radiator fill level is usually about 3 inches below the filler neck. My radiator actually has a fill level line stamped into the side of the radiator tank, below the filler neck.
I hope you find this information helpful, and your heating issues get resolved so you can enjoy your new engine in the upcoming cruise season! Please let us know how you make out.
