to simulate in the water, all you have to do is disconnect the inlet line from the pump and connect your hose there. that way the cooling flow will be identical to when in the water and not going backwards as it normally is on the hose. depending on your hose water pressure, it will probably be close to pump pressure at idle.
I think Lou means .040" and not .004" above for impeller clearance.
There is a elbow fitting in the cylinder head where the intake water hose connects. It is clogged there. (Seen it many times). Remove the hose and try to work a small wire up thru the fitting. Remove the temp sensor from the middle of the head and try to work the wire the other way. I usually clear this type of blockage without removing the head. Compressed air will help alot to.
no plug, that is a water exit when it is in the water.