Start with a fresh 195 degree thermostat. I buy mine directly from Jeep or the Stant SuperStat is good. Stay away from el-cheapo stats; they are worthless.
Fresh 50-50 coolant and see where you are at.
What is the history of routine cooling system maintenance on this engine?
You may have more than one thing going on. If the temp of the gauge was that hot, you should have heat in the cab. The heater control valve near the firewall is ALWAYS suspect here first.
Without data, all you have is an OPINION!
Past Jeeps: '49 ******, '81 Scrambler, '88 Comanche
Current Jeep: 1999 XJ Sport, bone stock, daily driver.
I work on Jeeps!!