Wanted to send a quick update.  To help me diagnose the issue I have essentially replaced every cooling hose with clear tube and replaced the sea strainer.  All the changes seems to have helped.  I was able to get the boat out this weekend an it ran between 175 and 191 the whole time we were out.  I even towed the kids in a tube for a while.  I'm running the Stant thermostat so I assume that will account for some of the warmer than usual engine temps.  Interesting thing I found out is that we are still sucking air into the system but when I search for a leak I found that the air was coming in from the intake port on the bottom of the boat.  I guess as we skip through the water we take on some air.  But it also seems to happen at heavy throttle on a holeshot.  Does this seem normal?  Would you expect to be completely airless?  I have attached a few pics to show the hoses and the air in the heater line.  
Good news is the boat seems usable again.  Bad news is I'm not sure I have the issue completely licked.
Thanks again to everyone that helped out!