Spike! Hold everything! I may have found an article that describes your problem, as the symptoms are exactly what you have reported above (very little movement of the temp gauge when engine is hot). See this link and have a read about the 36 ohm bias resistor inside the gauge.
http://holdenpaedia.oldholden.com/Temp_Gauge_Repair
It looks like the gauge will deflect when doing the shorting trick, but reads very low or not at all under normal operation. See if you can spot and measure this resistor in your gauge cluster.
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