My personal preference is to stick with the hottest possible thermostat. If you are modifying the engine to be racier, or maybe you have some temperature-related detonation/knock (and are using sufficient octane), then maybe go with a cooler thermostat. But a 195 degree thermostat will give you better MPG (and more heat in the wintertime). Plus your oil life will be longer (burns off volatiles better).
[I'm sure many people will say "My 180 degree thermostat works fine" and I'm sure it does, but unless you have a reason for the colder t-stat, I stick with the hottest possible]

The oil pressure looks fine. I'm guessing the engine is cold because the pressure seems like it is high to me. What viscosity oil are you running?

I wouldn't disturb anything that doesn't have a reason to be disturbed - so I wouldn't touch the temp sensor.

One other note. Water vapor is a normal by-product of combustion, so there will always be vapor coming out of your tailpipes - it's just more visible during certain (colder) conditions. And another note- since the exhaust system is hot when you shut off, this vapor will tend to condense on the inside of your exhaust system as it cools. Therefore after startup, you are getting all of this extra condensation vapor out your tailpipe as well. Every car does it, and don't be alarmed unless you are fogging up the whole neighborhood. Simple high school chemistry stuff.

Also, consider a complete cooling system flush and changing to green stuff. It's a good time to do it. Dexcool (and the lack of changing it) is probably the reason for your LIM gasket failure.

Your plugs look fine to me. Are you going to re-use them? (Why did you remove them?)

I would use thread sealer but not loctite (unless you never want them to come out again).

As a side-note, I believe the torque specification for the LIM bolts is for a dry bolt. I think that should be changed when using thread sealant (since it acts as a lubricant) but I've never seen an appropriate spec for that. In general I tighten about 15%-20% more than specification when using lubricated fasteners.

I also agree on plugging the passeges to the throttle body. No need unless you are in upper alaska.

I'm surprised at the cracked gasket. I would also be worried about that, and if time permits I would source another one. Hate to have to re-do...

I'm a big fan of cleanliness - and it looks like you are too! Worth taking the time as you do the job.

-BC