There's been an interesting assortment of posts lately on the listed subjects.  Here's a few thoughts:

Basic function of cooling system components has the thermostat setting the --minimum-- temperature the engine will run at after warm-up.  Unless it is sticking closed, whatever happens after it reaches its set temperature is a separate function.  Once the thermostat is open, heat is transferred through the radiator to the air, subject to the capability of the water flow and the airflow.  Water flow assumes that the thermostat is flowing adequately, so the finger goes to the water pump if flow is inadequate, or directly to restrictions in the radiator tubes where they might be corroded or plugged with scale.  I normally vote for radiator problems first, if only because they are more common on under maintained cars, plus they are easier and cheaper to fix generally.

Airflow is the second variable in the heat exchanger function of the radiator.  At idle, the cooling fans provide airflow when the temp is high.  That temp determination comes from the thermostatic fan clutch on the mechanical belt-driven fan, and from the temp switch and AC operation (I think) for the electric fans on pre-S4/GT cars.  On S4/GT/GTS cars, the fan speed is managed by a variable speed controller that reads engine coolant temp, looks at the AC system, and generally works to keep the car at 195f or so.  S4/GT cars have the additional temp control function built in via the grill flaps, which work to maintain the car at the same 195f approximately.  So, how does all this stuff play together?  Glad you asked...

A car that overheats at low speeds but is OK once at faster speeds often suffers from airflow-related problems.  This might include a fan clutch not working, electric fan or thermo switch not functioning, or some combination.  The drive OK on the freeway/overheat on the off ramp syndrome is covered by this description.

A car that overheats at faster speeds is most often a victim of water flow problems.  Again, the most popular problem seems to be corroded or otherwise restricted tubes in the radiator. Then on to water pump issues.

A car that overheats almost immediately after startup has water related problems.  This happens when a thermostat is stuck shut, or a water pump is non-functional, or the radiator is completely plugged, or there is no coolant in the engine.  It's also common after a cooling system service when there are still air pockets in the coolant loop.

S4/GT cars add the flaps and the controls for same.  In proper operation, there are three flap positions IIRC, all based on engine temp and AC system pressure.  As others have pointed out, the system may be conveniently disabled by winding the flaps manually to full open with the engine off, then pulling the fuse.  I like this method better than pulling the connector at the actuator, since the only exposed electrical connections will then be inside the car at the main electric board rather than under the hood exposed to the elements.

Lower temp thermostats will allow the engine to run cooler --so long as there is sufficient radiator capacity available--.  If your car likes to overheat, a thermostat will only help if it was a stuck or plugged thermostat that was restricting the coolant flow at temperature.  A low-temp thermostat doesn't flow more coolant, it just allows coolant to flow sooner.  Radiator fan operation needs to be coordinated with thermostat operation if you want the car to stay at the cooler temp all the time.  Otherwise, the thermostat will keep the car from going below the lower set point, yet it will go up to the switch turn-on point before the electric fans kick in.  Match the thermostat temp rating to the fan switch, allowing a window within which the temp will vary so that the fan isn't always running before the thermostat opens.

S4/GT cars may be less than ideal candidates for low-temp thermostats, if only because there are other things that help manage the minimum coolant temp besides the thermostat itself.  For instance, the grill flaps stay closed if the coolant temp is low, assuming that the AC isn't turned on.
So even though the engine coolant has reached the lower set point for the thermostat to open, airflow will be restricted by the flaps until about 195f is reached.  Maybe pulling that flap fuse is a good idea, eh?  The electric fans will still only operate based on coolant temp and AC system pressure.  So again assuming the AC is off, the temp will end up hovering within the fans' control range when driving slowly, only dropping to the thermostat's temp setting when the car is moving fast enough to not need help from the electric fans.  Temp will therefore swing from thermostat temp at higher car speeds up to fan controller temps when you are going slower.

The AC condenser sheds heat extracted from the air inside the car.  Since it's mounted in front of the engine radiator, driving with the AC on reduces the amount of heat that the engine can shed through the radiator. Notice that you car runs hotter with the AC on?  Marginal radiator capacity may be the culprit.  In slow traffic with only fan airflow and low water flow, it's pretty normal to see the temp come up a little with the AC on.
It would take an exceptional radiator to cover this situation completely. However, a car that heats up towards the red area on the gauge is not normal, and deserves some attention.

Other interesting things to consider are the outside physical condition of the radiator and condenser, and the amount of dirt and debris that accumulates in the fins of both.  It's not too difficult to blast the bugs and cigarette butts out of the front of the AC condenser, but be careful not to bend the fragile fins on it.  It also seems that dust and dirt will get packed in between the condenser and radiator, blocking some airflow even though you can't easily see it.  Might be a good exercise to take the radiator and fans loose next time you change coolant, and lean them back far enough to flush the accumulated dirt and debris out from in between.
You can also just wash the whole mess on a regular basis with the hose from the front, and at least keep the dust and mud cleaned out a little.

Overheating the 928 motor is potentially fatal, due a lot to the precision clearances used in the bores.  A piston that grows due to overheating can scrub a bore enough to inhibit ring sealing.  Detonation while overheated damages pistons.  Those expensive heads tend to warp, and head gaskets may not survive without leaking water into the oil and the chambers.  All ugly stuff!

So stay on top of annual coolant services.  Avoid overdosing the system with too much coolant.  Use just enough for the freeze protection you need.  Try Redline's Water Wetter cooling system additive.  Use the extended life coolant like Dex-Cool for the aluminum block.  I run about 30% coolant and water wetter together for a little overheat protection and to keep the water pump seal lubricated.  Try to use grocery store distilled water for makeup to cut down on mineral scaling.  Replace those hoses every five years, and check/replace the thermostat at that time.  Drain the galleys in the block when you flush by pulling those bolts in the sides of the block.
Gets all the old rocks out of the coolant system.  Use new sealing washers there, and dope the bolts with never-seize so you can get them out again someday.  The heater control valve is a Good Thing to replace when the system is drained, although it can be changed pretty easily at any time.
Maybe the five-year schedule would be good for that too, when all the hoses are renewed.  Don't forget the hoses!

Did I miss anything?

Hope this helps!
dr bob