I went thru a lot of engine temp issues at one time.
Best test I know to confirm a warmed up engine is: grab the upper radiator hose firmly with one hand. If you can keep you hand on there firmly, it's not fully warmed up. If fully warm you will want to pull your hand off.
If heater blows hot, there's a thermostat that's working at least partially.
Could be the t'stat is old/tired/gunked up. Maybe the t'stat spring can weaken, then it doesn't shut like it should. Could be ancient, you know. Cheap part too.
OR it's the wrong one.
Wrong t'stat happens easily. They only come in a few shapes/sizes but each size comes in various temperatures. Very easy for someone to put in one that's built for a lower temperature. Especially if they're scared of overheating.
OR the gauge is bad. I think to test/verify that you'd need a spec for what the resistance of the temp sender should be when warmed up and verify that with an ohmmeter. Probably you won't have to get involved with that process.
Currently getting +/- 50 mpg in fall weather. EPA is 31/39 so not too shabby. WAI, fuel cutoff switch, full belly pan, smooth wheel covers.
I remember the hatch squeak, it will grow on you. When you change the O2 sensor, get the special tool from autozone. It is a lifesaver.
I already own two of those things... love them.
As for the temperature, part of it could be due to the o2 sensor... part of it could be the tstat. Since I've replaced a few tstats before, I might just go to Honda on Monday and get new plugs/wires/tstat just to ensure that they are the right ones for this car.
Oh yeah, the distributor was recently replaced, so that's nice.