Hmm..usually they don't upshift, but downshift, my guess would be an abmormally worn slider, maybe the syncro as well, either way its confined to that one shaft is my guess. 4th gear works okay?
2nd?
About the overheating, have a leakdown test done, that will tell you if you have a headgasket problem. How many miles do you have on the water pump? When they fail, coolant doesn't 'disapear' it leaves a nice trail inside the timing belt cover and exits by the crank pully

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The factory heat gauge is a guestimate at best, make sure the mixture is consistant and there isn't any air bubbles. Also, which degree thermostat did you put in?
How are the wires around the t-stat housing?