Checking coolant temperature with my hand on radiator cap. The gauge is above the red, into the "H", but isnt even hot enough to scald my hand.
That might not be a conclusive test of a bad sensor. If the car has been, and is, out in near or below freezing temperatures, it might take a long time for the radiator cap to get scalding hot. Also, there might not be a lot of coolant flow to and through the radiator when the ambient temperature is low, so the cap might not reach the same temperatures as in the engine itself.
The question is whether or not the sensor is faulty. To check it, we would have to know if the temperature of the coolant at the sensor is what the sensor is indicating.
When the cooling system and sensor are working properly, and the gauge is up at the red zone, the coolant temperature is above 120 C. To check if the sensor is working properly, the idea would be to check the temperature of the coolant where the sensor is located. It's mounted into the water (crossover) pipe that bridges across the top of the engine. It's not readily accessible, but an infra-red thermometer can be used. (
https://en.wikipedia.org/wiki/Infrared_thermometer ) On your 2000-2004, the sensor is on the back of the water pipe, opposite the pointer in this diagram:
Check the temperature in that vicinity after the pipe itself has had time to heat up and the gauge is reading normal, or above. If the gauge is at normal, I would expect the water pipe at the sensor would be somewhere in the range of 80 - 90 C, depending on how long the gauge has been stable at the normal position, and how cold the water pipe was to begin with.
And there is no regularity to the new fault, seems be more likely in freezing temperatures...
When the thermostat was replaced, what was used to refill the cooling system?
Fans should be working as soon as the gauge is even a pointer width above normal, if not before then. When do your fans turn on?
Has to be a sensor doesnt it?
It's possible, but based on the information we have so far, I don't think that can be said with some confidence.