The purpose of welding a distributor is to lock the advance to a set amount. This is very common for roundy-round racers, it is suppose to keep the delay in acceleration out of the corners from happening. Most of the time timing is set higher then normal engines would be for racing; this will create the engine to run hotter. From what I have seen 240-260 for a roundy-round racer is normal temps.
If you are using this motor for street driving then I would swap out the distributor due to the timing is locked in.
How slow is slowly rising to 240 degrees? 10 minutes, half hour or a hour?
It is hard to tell if the water pump is to high volume by watching but I have experienced this on a 85 Z28 I had. I had a high volume water pump and the car ran 240 but someone suggested going back to the stock pump and the temps dropped down to 210 after that.
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