T-stats “fail open” - and this sounds like that.
Have you watched your heater valve move based on where you have the heater control/slider position in-cab ?
Before tearing into the dash or re-breaking the coolant system, I’d verify the valve is moving & if it isn’t - manually open it & see where your heat in-cab ends up.
Do you get something like a 1/4 guage on the engine temp - or does it run right to that middle-zone?
My heater was possessed. But after a simple exorcism, all is well. I've had this problem with my heater on my '94 FZJ80 for some time. I would select a temperature with the slider and randomly the heater would go to full heat. I could jiggle the temperature slider and it would return to...forum.ih8mud.com