JoeB,
It's true that a freshly rebuilt engine will develop a bit more friction related heat as it beds in, however it isn't usually too noticeable. First, is it running hotter on the gauge than it was before the rebuild? Second, is the same gauge in place? or has it been rebuilt? We need to determine if the engine is truly the same temperature as the instrument indicates. Find someone with an infrared instrument to scan the outlet neck.
Also, remember that this is a non-pressurized system. Some loss is normal from expansion, and it doesn't sound like you're exactly boiling over under normal running conditions. Are you using a mixture of water and anti-freeze? Your ambient temperature (72 degrees F. for us Yanks) shouldn't be promoting vapor lock, but the location of the fuel pump on T Series cars under the bonnet does indeed lend itself thereto.
Many of these engines have been converted to a modern themostat inside a traditional looking housing. Have you done this? Surely, in doing an overhaul you replaced the thermostat anyway, but I suppose it's possible it's not doing its job.
These motors are certainly not noted for running hot, but when we do a rebuild here in the shop we always renew everything in the cooling system. This includes the water pump, the aforementioned thermostat, and a boiling out of both the radiator and the block. If you've covered those bases, then do be sure to check the ignition timing, as a retarded setting will make this unit run warm for sure.
As a last resort, should none of the above prove useful, Empty the cooling system, then fill with pure water but for about a quart of antifreeze and a bottle of Redline Water Wetter or a similar product. This almost never fails to lower operating temperatures. Just remember that you have no protection in frosty weather. Good luck.
P.S. One last thing: A number of folks have discovered that you can fairly easily adapt a late MGB fan blade to this water pump, and that it has made quite a difference. I haven't tried it myself, but a number of people seem to have had success this way.
Motorbill
From Lola to Land Rover, If it's British and has wheels, it's likely I've bloodied me knuckles thereupon