Fluctuating engine temp and no heat.
 

So I just had to pull my engine and install a new one, it is running smoothly the only problem is the eninge temperature fluctuates from under the 210 line to above it and will not settle. I installed a new thermostat with the new eninge and thought I burped the colling system well but may not have will try again when I get home. As well as this the cabin heater does not get hot like it used to, it's warmer than the outside air but not by much. I fear the issue is connected any input would be highly appreciated.

Pretty common issue
 

Burp the system once more, may of gotten a bad thermostat new. It happens. But as for your heater that is an extremely common issue as well. Pull your heater lines off and backfeed through it and see what kind of gunk comes out. That’s just part of jeep life. I recommend putting a coolant filter on. You can get it done for like 50 bucks and it will keep crap from building up in your heater core. It’s extremely annoying to change out your heater core so you definitely want to make it last as long as you can

Heater hoses are the ones running to the fire wall off the thermostat and water pump right? If so which way are they supposed to flow.

Diagram
 

https://cimg0.ibsrv.net/gimg/www.che...e5da49906.jpeg
Weather you have a heater valve or not the flow is accurate

Is heater valve is only on the open cooling system? And could air bubbles be affecting it because I think it was working yesterday but it was 20 degrees warmer as well.

No it’s on a closed system
 

If yours is a 96 it should have the open cooling system unless when you swapped the motor over you went with a closed system That diagram was only meant to show you coolant flow so you can potentially backfeed through your heater core. Main line coming out of the top of the thermostat housing is the feed

Sorry my brain forgot which style is which, I meant do closed systems have the valve or do opens have it too.

Closed
 

Just closed systems have the heater control valve