1987 Honda Accord Temperature gauge/overheating problems

I have an 87 Honda Accord. For the last week I've been losing quite a bit of fluid from the radiator from a bad seal. The hose leads to a spot underneath the air filter, to the rear of the engine. It took awhile, but I got the hose off, cut off a few inches where the leak was, and put it back on.

I went to drive it and the temperature gauge is going up and down randomly, never going above the halfway point. I began to drive and noticed that whenever my foot touched the accelerator (5 or 50mph) the needle would go down below the lowest spot on the gauge. As soon as my foot let off the accelerator, the needle would slowly go back up to the halfway point.

I drove the car for about 10 minutes when I started getting seriously worried about it. I parked, poped the hood and noticed that the fan was not running like it should have after 10 minutes on the highway. I parked it in a safe place and had my fiance drive me home.

Would this be caused by air in the line from my quick fix of the hose? Perhaps a thermostat or water pump issue? Any help would be greatly appreciated as I'd rather fix it myse