I don't have a lot of experience with closed cooling systems in boats, but I would think that capacity can't be the issue here if you are not running the boat at speed with that beautiful blower humming. The second bypass line is to bleed air from the system, and the flow also lets you know that the primary water pump is working. My old Jaguar XJ8 has a bypass line like that.
I guess one question to ask is whether you feel heat in the water line running from the engine down to the heat exchanger/radiator intake. With the thermostat out, that should be heating up with the engine. If it isn't, then you clearly have blockage inside the engine or heat exchanger, air in the pump or there is a plumbing problem. One idea would be to tape a thermometer to it and see if the temperature matches what you are seeing on the gauge. A remote oven thermometer might be an option.
If it was my project, I would have the electric pump in backwards or something equally clever.
Great looking engine bay.
- Don