Why will a 1991 Toyota Previa not heat up. The thermostat has been changed.?

There are 3 symptoms. No heat from heater, low reading on temp gauge, and transmission will not up shift to overdrive (this is normal cold engine operation). Clamped off radiator hose with a pair of vice gripes and let the engine run. Temp came up to low normal but could not get engine to go hotter. Engine was still cool enough where I could put my hand on it for a few seconds without it burning me. Any one has any ideas how the heat is being dissipated or why this engine is not producing more heat.