Well the gauge sensor checked out OK, but I think I've identified the problem. The low temp readings I'm getting seem to be related to an intermittent high idle problem I'm having recently -- when idle is normal, so are temp readings, when not temp reaadings are low.
The high idle seems to be related to the throttle linkage/microswitch. When idle is high (1200-1300 in neutral) and I depress the microswitch roller, idle returns to normal. So I either need to adjust the linkage or replace the microswitch.
Thanks for all the replies everyone!
'91 300E, 212K miles