The heater was intermittant because you were low on coolant and there wasn't enough to pump through the heater core. I'm guessing you lost coolant through the loose hose. That eventually caused overheating. The continued overheating is caused by an air bubble in the system. It is hard to get these systems filled without an air lock. Best way is to fill the engine by disconnecting the top radiator hose and filling it with the nose pointed uphill. Then, leaving the radiator cap off, run the engine with the heater on full blast. It would not be unusual for the engine to run hot for a while until all the air is purged out and you have topped off the coolant.
I'm guessing it has nothing to do with the thermostat. I would not bother changing that until you are sure the system is full and there are still problems.

__________________
1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13