Overheating I have Idea what else it could be?

You need to measure the actual temperature it is running at. C & H mean nothing really. Now if it pegged at H and coolant started bubbling out of it, then you know it's overheating. However, at the moment it doesn't sound like it is actually getting hot. The temp decrease with the heater on is 100% normal. You are adding a second place for air to pull heat away. That still doesn't tell you the coolant temperature. So, use an actual thermometer and run it, now measure the temperature at the coolant outlet, the thermostat housing, the radiator and see what it actually says. If they are under 200 degrees, it isn't overheating. If it hits 202 and the fans start turning, it's normal, if it hits 220 and they are on full it's normal. What you don't want is for it keep rising.

You want to measure the temperatures. For instance, you look on the Autel and it says it's 220 degrees, you measure at the top of the radiator tank and it's 150 and 120 at the bottom, you have a flow problem. The other thing to check is how fast does it heat up? You said you changed the gaskets, but you could have a cracked head or block. A quick and dirty test for that is to start with a cold engine, put a balloon on the radiator fill and start the engine. It normally takes coolant a while to expand, and the balloon will just very slowly expand. With any combustion gas leak it will blow up fast, long before the coolant heats up.

If I can jump in here, have we checked for a cracked block? I would do a chemical check to confirm we don't have exhaust gasses in the cooling system, this guide can help:

https://www.2carpros.com/articles/head-gasket-blown-test

Please go over this guide and get back to us.

Okay, that is a normal operating temp for that car. If it's dumping coolant at those temperatures I would look at a bad cap or a crack in the neck if that's where the coolant shows up.

That doesn't look very nice, almost looks like the substrate is damaged, that could cause it to heat up though. The white looks like it may have gotten very hot and fused the ceramic closed.

Plugged cat would hold heat in the head and cause it to heat up. You could cheat a bit for testing. Get a chunk of straight pipe and cut it just long enough to bridge the cat opening. Remove the cat and stick the pipe in place. That will quiet it down so you can run it in the driveway without the neighbors showing up all angry. If it stays cold, you have the answer. If you are not in a CARB state like NY or CA, you might be able to get one through Rock Auto for much less. The Walker 52507 is about $250.00 for the federal version.