i found this diagram.. indeed, water does flow up through the thermostat housing from the block.. What I didn't realize is that it also flows into the top of the circulation pump through a rubber hose connected to the valley.. I guess when the thermostat is closed, all of the water being circulated through the block and heads gets back to the pump through this hose.. It's hard to see on my v drive, can others confirm this is what the LTR looks like??
Basically, the thermostat opens to let water OUT of the engine where it is routed through the thermostat housing and into the exaust risers and out the exhaust. As this hot water leaves the engine, there is then room for sea water to be drawn into the circulation system through the hose that connects the circ pump to the thermostat housing, and this sea water of course comes from the seawater pump.