note: I did notice with the heater on that if I am cruising it sits at 90c, but if I go down a hill or have very low revs, it sits on about 82c. Expected ?
Yes, even with the thermostat closed (to the radiator), it is allowing hot coolant into the heater matrix, and this is cooling the engine, basically because the engine is doing next to no work (adding very little heat to the coolant), and the air blowing through the heater matrix is taking a lot of heat out of the engine. My JTD does this on long downhill stretches.
I did two runs on the same hill where I have had overheating before and I could not get it to overheat. Heater was always hot. So, I stopped and checked under the bonnet. No leaks. I touched big fat radiator tube and it was only luke warm. The heater was still on at idle and this caused the fan to start stop every minute. Expected? These performance runs were the same as others days when I had issues, so I was surprised it did not overheat.
I assume you mean the big fat radiator tube is the upper coolant hose, that runs from the thermostat to the radiator? This should be hot pretty much all the timewhen the car is up to temperature, as the thermostat will probably never fully close, especially when the car is idling.
For the 3rd and final run I really had foot to the floor. Still had heater on max. Near the top of the hill the cabin heater temp dropped, went almost cool.
At this point coolant has stopped circulating into the heater matrix in the dashboard. Coolant has to pass through the thermostat before it can enter the heater matrix.
I don't know why the thermostat may be seeming to block off coolant flow, but it does seem like this could be your problem. Or, under extreme load the waterpump is slipping and not pumping coolant, but I've never known a diesel waterpump to do this, only V6 ones.