Yeah those 2 hoses you took off the heater core should be connected together. Otherwise coolant will just sit there. Where did you install the sender for the autometer temp gauge? As for temps rising when the a/c is on im not sure, I noticed the other day that mine dose the same thing. Otherwise I think as long as you connect those 2 lines together your temps are fine with the a/c off. Now to figure out why temps go up with the a/c on.
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the ac condenser gets hot when its being used, that, being right next to the radiator will probably bring your temps up, along with more load on the motor.

 

Sounds logical!

BTW Phil, the Autometer sender is teed to one of those 2 back hoses.