Yeah, the temp switch is usually the one in the head, but on some models the temp sensor is in that location on the opposite head. I had a problem with that wire burning on my headers too, but I went with a factory bracket that locates it off the headers to solve it. I found it on a 305 powered 80's car and then zip tied the wire to it. It goes under the valve cover nut just above the sender and extends about an inch or two out from there. this is part of the reason I went with an ugly, factory look on my car. It permits the retention of a lot of neat solutions to seemingly minor problems-plus it is cheaper too. I may be wrong, but I think the sender in the head you have is for the gauge by the looks of it. Check it with a volt-ohm meter to be sure. If it has no continuity, it's the switch. If it has some continuity it is probably the sender. Second observation I am fuzzy on: I think the G body used the threaded port on the front of the intake manifold for the temp gauge sender and not the head. I seem to remember the F bodies being in the head as I used to have a seemingly high temp reading in a Camaro I did for a friend. I do not have this hooked up on my car right now so I am not 100% sure what is what. The harness I have from the Grand Prix was odd in that it had a oil pressure gauge wire but no tach or water temp gauge wiring. I have since sorted the tach and got it to work, but have not set out to tackle the temp gauge as of yet. It and the speedo are the last two things I need to sort out in the dash.
Oh, and Chillin, you have a loose plug wire on the passenger's side bank in the photo. I would also advise you to get a good set of plug wires from MSD, Taylor, etc instead of what you have ( I am thinking stock replacement). You need them with headers since the radiated heat will kill the boots in short order. Trust me, I have been there and went through 2 sets of stocks in 3 days before biting the bullet for a set from MSD. They have been on my car for 10 years without trouble. If you get the stock length ones, you can use the factory G body looms and run all but two of them under the headers like they are on my car. Also, you seem to have the correct brackets and hoses for a LG4 G body. mIne are a little different because I have the ones for a L69 F body so I can run the dual snorkel setup.