Thermostat should get it up to temp regardless. My guess would be that the pump can't push against enough head, so it wouldn't get enough coolant flow and either the keel cooler wouldn't be effective enough or the low flow rate would cause hot spots in the engine.
Pretty much correct. Even though the keel cooler piping is pretty much horizontal with respect to the pump, it's volume is such that it acts like there is a lot of vertical head. The small Sherwood raw water pump doesn't have enough power to push water through the large volume keel cooler. This causes the engine to overheat because it's not getting enough cooling water. When we first bought the boat I considered adding an larger off-engine pump with enough volume to use the keel cooler, but the heat exchanger worked just fine and I had other projects that I wanted to do. So, after 20 years of cruising, I just never got "a-round-tuit".