the holes aren't for bypass. The holes are for air pocket purge. A good sealing auto stat with no holes can trap an air pocket around the sensing portion of the stat and keep it from opening properly. It can then go thru an overtemp/open/cool/close/overtemp/open cycle. Not saying this is his problem but you should run a stat with a small bleed hole (1/16 will work).

I've seen handfuls of people install t-stat + components in wrong order or use wrong parts/gaskets.

Click here : http://www.mercruiserparts.com/Show_...COOLING+SYSTEM

And note order of parts and part #'s - especially gasket up at top. Look at #5,6,7, and 8.

Also, take a look at water hose from drive to transom assembly. Over time these can get real soft and kink, especially with drive in up position. Easier to check while on trailer. This is in addition to info given above from others.

Yes, sometimes cooling issues on the hose disappear in the water. Some water supplies/hoses don't provide enough volume.

I've never seen an Alpha yet that didn't steam from one bank after a hard run. I can't remeber which side though. Those were Gen1's, they may have corrected it on the Gen 2's. Personally, I never thought an Alpha drive pumps enough water anyway, especially with the warm water we run in here in Florida. If I ever do another Alpha set up, I'll put a transom mount water pick up, and a seawater pump on the engine.