[storm9c1]

Before we get too crazy, I would think if the pressure is too high, the cap would allow some overflow. What PSI cap is on there? The cap controls the amount of pressure in the system. If it is unknown, just replace it. It's cheap.

There would have been no need to drill holes in a 160 stat. Maybe a single tiny one to relieve trapped air. But that's all. I do think you are running a little hot due to some other influence. And the things already mentioned could affect that. Check your timing at idle with a timing light! For example, timing set to 2 degrees BTDC (too little initial advance) will start right up but will run like crap and have no power and will produce extra heat. Did you say what type if ignition you had? HEI? If so, then it should be set to at least 8 degrees advanced.

Also a carb running lean cause excess heat. Make sure the choke is working on the carb. Make sure it is opening -- or wire it open -- and see if the problems still persists. Sometimes it could also be dirty jets. Or the carb is just jetted or metered too lean to begin with. There are a ton of factors here. Unfortunately we gotta start somewhere and work through the list.