Sounds like an interior tempature sensor going bad. I'm not as familiar with your chassis but with the W123 / W126 there is a hose that pulls air through the temp sensor that falls apart. Your vehicle may have a similar set-up in a different location.

My Volvo acted the same way when I had the interior temp sensor covered up, taped to the roof while doing the headliner.

__________________
Adam Lumsden
(83) 300D
Vice-President of the MBCA International Stars Section