I think the 160f t-stat is too low and it may not be allowing emough coolant residence time in the radiator for proper cooling.
I just got through solving my "running too hot" issue. I'm not really sure it was ever running hotter than "normal"...but it was hotter than I ever want it to run. The solution was a 160-degree TRD thermostat (the little [email]bast@rd[/email] costed me $80 too).
My issue started when I installed a real temp gauge (actually put it in the gauge cluster....it's pretty trick) and installed a 2-speed ford taurus radiator fan. After I finally resolved some wiring issues with the control (needed to add a few relays), I found that my truck was running around 205 - 210 when I'm just cruising around town....which is too hot for my tastes. So.....and after messing with the fan temp settings relentlessly, I gave up and started talking to those who know far more than me. Aside from a few posts on here, I harrassed every toyota service tech and manager and every toyota specialist who'd answer the phone. What I came up with is that a stock 3.4L motor (and probably true for the 2.2 and 3.0L) will run around 205 - 210 under normal conditions on a hot day....and that is too hot. Ideally they should run around 185 - 195.
According to all the experts I talked too even 210 really isn't
that bad, provided you aren't beating on it, and you change the oil regularly. But, that's a problem for most of us since we are wheeling our trucks. They all also said, the best solution is a 160-degree thermostat. A couple guys mentioned bigger radiators and electric water pumps too....but those were for severe, extreme use scenerios.
I put in the 160-degree thermostat this evening and just got back from about a 30 mile start/stop around town drive. The highest my temp went too was 190 and it spent most of the time around 180-185....perfect as far as I'm concerned.
And...I also "experiemented" with the stock toyota temp gauge on my bench and found out that it's really tunned for a certain temp range. My experiment was pretty crude but, I found that for a range of 140 - 210 degrees my factory temp gauge would stick in the same position (right at the mid point)...anything over 210 and the gauge would move quickly to the high side and peg at around 225.....which tells me that if the factory gauge is going beyond the mid point, you are probably already in the danger zone.
So...all that being said....check to make sure you're water pump belt isn't slipping (which would happen more at high RPM's, replace your thermostat (just to be safe) and check your radiator for plugging. My vote goes to a plugged radiator...if you don;t use distilled water in there, they can plug very quickly depending on the minerals in the water.