Water temp port? (revised)
 

I am working on installing a second water temperature sender and I wanted to know if it is okay to remove this plug and install it here by the pump. I can't use the normal one as it sends high readings (feel free to offer a fix for that as well).

https://lh4.googleusercontent.com/-w...UNSET%255D.jpg

I am rigging up a switch with an Autometer gauge in the dash so I can go back and forth between trans temp and a more accurate water temp.

That plug is used for cooling system bleeding. The core unscrews from the plug and allows air out at the highest point in the system.