The position of the Dist/Cap/Rotor should be ok as long as it's all set to function properly etc.

It sounds like if you have the initial timing set right, and the advance is working properly, that as you mention not having a T-Stat in?

That would be one contributing factor to heating up... Another would be the devider plate not being close enough to the impellar of the water pump when they are together. Then there is always a posibility of the carb being slightly lean... again, another common contributor to a hot Poncho.

So maybe install a 180 T-Stat, then try it out.

Double check the timing/dwell, and carb settings

Then if you have to... check to see if the devider plate is close enough to the impellar fins on the water pump. (this topic has been brought up a few times but here is the whole story)
http://www.wallaceracing.com/water-pump-mods.php

Start simple and go from there!

Brett - 67 Drop Top 455!