Well it appears I've wasted about 10 hours that could have been spent with my kids and $50 worth of thermocure only to end up right back where I started, if not even worse.
Repeated the process yesterday, In the following order, working as quickly as possible to reduce opportunity for rust formation.
1. Drain thermocure
2. Remove thermostat and water pump
3. Replace pump inlet tube
4. Flush and reverse flush heater core and radiator until it came out clear
5. Flush engine (in thermostat hole, out water pump hole) until it came out clear (clear stream, not caught in bucket)
At this point the inside of the engine was a nice clean shiny silver and I was feeling pretty good about it. Didn't think to take a photo cause I figured I'd have another opportunity at the end.
6. Reinstall water pump and thermostat housing, fan and shroud, etc.,
7. Fill with tap water, run 10 minutes, drain, 5x. Last bucket was clear enough. One of these times tried draining through lower rad hose to make it faster and soaked my hand in 160° water, went back to using the radiator draincock.
8. Fill with distilled water, run 10 minutes, drain, 3x.
9. While the third flush is still draining, remove thermostat housing to reinstall thermostat, inside looks like this.
10. Say "F*** THIS", installed thermostat and filled it up with $25 worth of G05.
At this point I'm hypothesizing that the inside will rust if it's given any chance for the water to completely evaporate off, and I don't see a way to prevent that without adding some antifreeze to every flush cycle creating 15 gallons of toxic waste that has to be disposed of, or to let every flush cycle completely cool to slow down the evaporation rate which would take you two weeks to complete the process.
F*** this.