There are a variety of opinions on this...engines are most efficient in general with water jacket temps of around 185-200. HOWEVER, water jacket temps can be the same on two different engines while internal design results in the actual temps in each engine being radically different.
So the definitive temp should be whatever the manufacturer states. However, this again, can be confusing. For example, according to the DD service guys on Long Island who checked the computer using the serial numbers, the original Tstat for my 8v71tis is 160. Frankly, that's too cold a running temp for any engine. Interestingly, the DD service manual lists several Tstats for the engine, NONE of them as low as 160.
Karl has mentioned numerous times here that the DD cooling system on these boats is marginal. I agree, finding that although our boat will maintain 185 or thereabouts at WOT in 75 degree water with freshly cleaned HEs and intercoolers, it will not a year after cleaning.
Holding 185 with a 160 Tstat brings up another point. The max temp an engine SHOULD reach with a 160 t-stat is approx 175. The standard full open temp of a tstat is approx 15 degrees above opening temp, which is the rating of the tstat. So a 180 Tstat is supposed to START opening at 180 and is expected to be fully open by 195. IMHO, THIS would be the ideal temp for these engines.
However, because the system is marginal, the cooling capability of the wide-open system is usually insufficient to maintain that temp under high loads and it will tend to climb to some point that may be too high and cause major engine expenses.
If you compare it to your car, you can clearly see the difference in relative cooling capability. Most cars will maintain virtually the same temp whether idling or at fairly high throttle settings. It is true, of course, that a car seldom actually uses a high throttle setting for more that a few seconds at a time. But even on a track or pulling a trailer up a hill, most cars still hold the appropriate temp. I drove an 1989 sporty car from Nevada to MD last year and in 108 degree temps in bumper to bumper traffic in Las Vegas or at 140MPH on closed roads, the temp gauge stayed at 195. So cars do it all the time, why not these DDs.
It's not the fault of the engine, it's the adaptation to the boat and, apparently the concern about space required for a larger HE that could actually keep the engine at temp.
So anyway, my recommendation would be twofold...first, if you are CONFIDENT that you will only run the boat at some reduced power setting - hull speed, for example - then you could install a Tstat that keeps the boat at a comfortable temp doing that. But if you want to run at planing speeds, you will likely have to install a colder Tstat. I suspect that's why 160 was installed in the oem configuration in our 53. Frankly, the only way you can figure this out is to experiment AND ensure that the system is clean especially if you want to plane. Of course, running at hull speeds is not too tough and our boat maintains 164 on both engines at around 10K.
So the issue is that you want the engine in the 185-195 degree range for best efficiency...the problem is trying to figure out how to keep it there under the different throttle settings with a shaky, at best, cooling system.