Couldn't sleep... waiting for the radiator shop to open (I have plans to use this truck for the holiday weekend!). Started reading more about small blocks that use vortec heads and the need for some sort of external coolant bypass.
Found some that said with a high volume water pump routing the heater hose from the intake thru the heater core to the radiator (this was how my 400 was routed) can cause excess pressure in the radiator. Maybe that is why it is leaking? I also have a external coolant bypass from the top port of the water pump to the intake manifold. Still not sure this is correct. After a few hours of searching online I did find this write up:
The deal is this: In the old coolant path water could circulate from the forward portion of the RH head, through a passage in the head gasket, into the block, and out through a 5/16" hole into the coolant pump. Inside the pump this coolant was routed to the inlet side, and the pump would circulate the coolant back through the block. This helped ensure some warm coolant reached the thermostat so the 'stat would open.
As the need for cleaner emissions increased, faster warmup times and better vaporization of fuel became more important along with reducing variation int intake air temperature. Later carburetor and TBI intakes routed coolant from the front of the intake, under the throttle body or carb, and back to the heater hose fitting. Coolant would circulate through the core and return to the pump or on some HD trucks, to the radiator. This routing also provided a faster and more accurate heat signal to the thermostat so it would open properly. Coolant always flowed through the heater circuit and if a restrictor wasn't in place, it could cause overheating as radiator performance began to decrease. In my experience the restrictor is always found at the manifold side (outlet). Although the bypass circuit is still present in the heads, some of the TBI truck blocks do not have the 5/16" hole in the RH side of the block for the bypass circuit. Its been a "gotcha" that guys have had to watch for since the late '80s.
With the '96 and newer 5.7, GM decided to approach faster warmup and consistent temps in a completely new way. They did away with the bypass circuit in the heads and the block and replaced it with a much larger bypass circuit connected externally from the manifold under the thermostat to the water pump. This alone is nothing new. In fact, the Chevy smallblock was one of the few engines that didn't have a large, external bypass circuit prior to '96. But what was new was that the bypass circuit flow was now linked to coolant flow through the radiator. As the thermostat opens to allow coolant out of the manifold to the radiator, it also closes the passage that leads to the bypass circuit. In this way, temperature in the block is encouraged to stay at the same temp as the thermostat opening temp.
When installing Vortec heads on an older engine, you don't have the advantage of either bypass circuit. The old internal ports aren't present in the head and the external passage doesn't exist. Consequently there is no "flow path" for warm coolant to get to the thermostat and cause the wax pellet inside to expand and open the 'stat. Drilling a small hole in the stat allows coolant to flow directly past the 'stat so warm coolant will arrive eventually. The trick to this is in two parts. First is drilling a large enough hole so the back of the block and the heads don't overheat before the thermostat gets the signal that it's time to open. Second, on a street vehicle used in cold weather, the trick is to drill the hole small enough so the engine can actually warm up and provide heat.
A second method to ensure some warm coolant gets to the 'stat is to connect the heater to a port as close to the 'stat as possible. Ensure there's no heater shutoff valve on the heater circuit and the 'stat will usually get a strong enough signal to open in reasonable time. If heater flow is blocked, however, there's a good chance the engine will overheat because the 'stat will no longer be exposed to coolant that's at the same temp as what's in the head and block.
The third method is to plumb an external bypass into the manifold. But the problem here is twofold. If the external bypass circulates between manifold and pump it tends to reduce cooling ability in summer. If the external bypass circulates between manifold and radiator it tends to reduce engine heating in the winter. In either case the bypass should be sized to only allow the minimum amount of coolant necessary to make the thermostat open. 1/2" and 5/8" openings are not appropriate for this bypass.