So I've put the thermostat back in and everything seems OK now. No milkshake and temps stay in the 200 degree range (just under midpoint). Without the thermostat I was seeing a slow rise in temperature while driving long distances (over 25 minutes) on the highway.
I feel this is because coolant was flowing too quickly through the radiator and not given proper time to cool before being cycled back into the engine.
People will have conflicting views on this, but I found that thermostats are not simply on/off gates but rather a flow regulator, opening and closing based on the temp of the coolant. This is my finding, I'm sure others will have different opinions. This is just my understanding based on my issues.
Major things I have learned from troubleshooting my overheating 2001 XJ.
- If you are having cooling problems, and have the stock radiator. REPLACE IT with a new ALL-METAL 2 or 3 core version, do not replace with a stock rad. They are crap.
- If your coolant is orange, it is likely rust from a disintegrating water pump (mine had basically zero fins left on it when I pulled it. Check the water pump, it’s not that expensive or difficult to do. Get a new one, not a reman.
- Your hoses are probably fine, but it doesn't hurt to replace them either. You probably don't need the spring in the lower hose.
- Check (or replace) the thermostat, I replaced with the 195 degree stant superstat.
- Change the radiator cap and don't go cheap. I bought a new non-stant one and it blew off coolant at pressure. Get the stant, but NOT the one with the pressure blow-off valve, you don't need or want that.
- A lot of people mentioned fan clutches. I did replace mine but I don't feel as if it made any difference, perhaps the old ones were fine.
Also someone mentioned taking it to a mechanic. Yeah, if I had a need to get this thing up and running, I would have done that already, but I have other vehicles and like doing things on my own and with the help of the internet. I think anyone using this forum is of the same mindset.
I had no idea the thermostat was that important in keeping the jeep at operating temp. I'm still not convinced but I've been driving it around for a few days since thermostat replacement and there have been no issues. I really appreciate all the help I have received! Good luck to anyone troubleshooting overheating issues in their XJ!