US engines use a different system. The bypass is always open, but the thermostat is located so that the dynamic pressure of the flow forces the water into the radiator. There is always some bypass leakage with this system.

The bypass has to be open in a Merc, or the thermostat would never open. This is because the thermostat is located on the cool side of the system. Don't block it.

What may be happening is that the bypass entry has cavitation damage. This is actually pretty common, because pressures around the bypass lip are relatively low, and the fluid is very hot. It shouldn't happen with waterless coolant, but maybe it's old damage. Similarly, there may be some damage to the pump involute or impeller which is reducing flow.

You might try shorting the electric fan switch and see if the extra airflow makes a difference.