Jorn, you should have the open-chamber heads and flat-top pistons.
Prior to '89 the heads had a large flat squish area opposite the spark plug, and used dished pistons. As a result, both engines had 9:1 compression. Mixing heads or pistons will result in way too much compression or way too little. Anti-freeze, even the correct stuff will eventually corrode the water passages in the head. I kept mine very clean, and still had some welding/filling to do at the first valve job, around 120k miles. So, yeah, it's possible the head was not original when you got it, especially if they used the green stuff on the radiator.
That little wire you mentioned controls the dreaded delayed 2-3 shift when the engine is cold - one of the most hated attributes of these cars. Leave it disconnected, you'll like it MUCH better when starting out in the morning.
Idle when stone cold in N should be about 1200; when warmed up, 700 with the vacuum gauge pegged left. In D idle should be 600, with the vacuum needle between the e and c on the ECONOMY gauge. This corresponds to about 16-17 in/HG manifold vacuum. Yours seems a bit low if it's fully warmed with AC off. Did you check the throttle stop switch on the linkage - Clicks when the throttle is closed.