This article is from the Chrysler-Plymouth-Dodge FAQ, by Dr. David Zatz with numerous contributions by others.
From: "Frank E. Tressler Jr." <firstname.lastname@example.org>
Problem: Sundance thermometer swings back and forth. Repair attemps include
replacing the thermostat and both engine temperature sensors. Test the fix
by keeping the temp control on RECIRC and seeing if th gauge stays at a
constant level. If so, check the hose going to from the thermostat housing
to the heater core - it goes through a plastic bypass valve just before
entering the heater core. The hoses on the valve turned out to have been
switched at a prior servicing.
Note that on many cars minor swings are normal during warm-up because the
computer allows small amounts of warm antifreeze into the heater to provide
some early heat while letting the engine warm up.