Econoram - At 250*, you have to start worrying about head gasket integrity, and particularly issues with cracking or warping heads. They just weren't designed to run that hot. 210* - 230* is the hottest running temp most modern engines will hold up to on a continuous basis.
As far as temp, a hotter t-stat would actually make more power. However, on many performance forums, they'll drop from a 195* to a 180*, as it is an easy way to drop the intake temps, particularly on V8s like mine that run coolant through part of the intake manifold. The intake temp drop overcomes the reduced efficiency from lower coolant temp when power is the only factor. If they could get the intake temps down while keeping the 195* t-stat, they'd get even more power.
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Call me crazy, but I actually try for mpg with this Jeep:
Typical driving: Back in Rochester for school, driving is 60 - 70% city
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