1997 Mazda Protege Engine Temp. Gauge

I have a 97 mazda protege. I just completed an engine change out. I bought an Imported JDM engine and installed it. I took all of the accesssories fromn the old engine and put them on the new one. I.E. Intake, power steering, A/C, Alt. Starter etc. I also put the thermostat from the old car into the new car since the thermostat was only 2 month old. I did not change the water pump out. The car runs great, idles perfect and timing is dead on. The only problem is when it's sitting still the temp. Comes up to normal operating temp. Gauge arm about mid-point. When you start driving the gage slowly drops back down to "C" (cold), it doesn't seem like the car is blowing hot air with the heat on, just warm. The upper and lower radiator hoses seem hot but not too hot that you can't put your hand on them.

Should I put another thermostat in? Since the inside of the car does not seem to blow real hot air at full temp.

What about the temperature guage sending unit? I used the one from my old engine, because it was the correct one for my wiring.

any suggestions?