If the hose got hot, then most likely the thermostat opened. 7 degrees is not that far off, given the non-perfect thermostat and temp gauge. Also, if the gauge sender is in another location than your thermostat housing, the coolant temps could be different. If the hose is cool, the thermostat is not open. Or you are not pumping coolant, but that usually works just fine.
The sensor is in the t-stat housing and my gage is a summit digital electric... I also bumped up to a 16 pound cap, because with the 13 it would puke the coolant out of the over flow... My 302 powered mustang did the same exact thing, I dont know why tho....
It would be better to move it pre thermostat and be more accurate along with giving a safety cushion if the thermostat was to fail