The ECM doesn't read the heater control position, and the coolant flow is not changed with the heat setting, so the only thing left is the relative positions of the temperature transmitter and the thermostat. If the cooled coolant causes the thermostat to close slightly, the coolant temperature will go up. Unless the temperature transmitter is right at the thermostat, it will read that higher temperature.
What are the relative locations of the thermostat, heater core discharge, and transmitter?
They are all on top of each other. I've attached some pictures of our thermostat housing below. This picture shows what the housing and coolant tube looks like on a Redline/GXP LNF engine. The "U" bent coolant pipe goes into the water pump on the disconnected end on this picture. On the other end, is the thermostat housing. Now the thermostat sits at the bottom end of this image but the cover is missing here. The cold water from the radiator comes in from this cap so everything in this part of the housing is hot water that has been passed through the engine. There are two tubes coming out of this housing and the one closest to the bottom of this picture is the hose that feeds the heater core. The return line comes in on the other side of the thermostat through the thermostat cap. So the feed and return from the heater core are right here in this area. Also, you can see the coolant temperature sensor still installed in this thermostat housing...it's between the two long silver tubes which are pointing towards the left side of the picture.
Here are how the heater hoses connect to this.
Now on the turbo cars, the coolant feed line for the turbo plugs in here too. So in the next image, you will see two holes, one on the right and one towards the middle right next to the heater line on the left. The Turbo coolant feed hooks up to the hole on the right and the coolant temperature sensor goes in the one on the left. You'll also notice an inset picture here. The little rectangle opening you see in that picture is where coolant can pass into or out of the engine block.
And here you can see the housing again with the thermostat in place with the cover on it. The one tube we saw in the first picture (that was the upper one of the two lines) is gone but with the cap in place you can now see the return tube for the heater core.
So here is my theory:
The heater core acts as an additional radiator. Once the thermostat has opened, hot coolant flows from the hot side of the thermostat up to the heater core. As you run your heater, this water is cooled off below the current operating temperature of the engine coolant. Now this "cold" water is introduced right above the thermostat and moves across the thermostat with the rest of the cool water coming from the radiator. However, this water is now cooler than the 180 operating temp thus the thermostat starts to close. Now the flow of coolant isn't where it needs to be to continue to maintain that optimum temp and engine coolant temps start to rise. So long as you use the heater, the average temp should remain higher than normal as there is the "extra cooled" water coming from the heater core directly to the thermostat.
Just my theory though.