Matt. Your method certainly should work, but ! Gen 2 sometimes needs to be jacked up really high on passenger side because of the cylinder head to coolant outlet tree junction design. Higher the better. I would suggest driver side on ground and passenger side HIGH. Then open radiator and heater matrix bleed points. Remove filler cap and now starting with the hose from the outlet tree and working round to bottom ones at front and finally to the one leading to thermostat housing. Give them all a gentle squeeze. Should get rid of any trapped air. Remember that any air trapped in that area just prior to the thermostat has to escape via the tiny jiggle valve. Just take some time doing this.
Now reintroduce your funnel and SLOWLY trickle fill till radiator and heater matrix bleed points ooze solid coolant.
Bit of a pain but it should absolutely have no trapped air which should allow thermostat to operate correctly.
I have tested several original temperature gauges and they are hopeless for detecting an overheat condition. Significantly above normal actual coolant temperature and the original gauge does not move from it's normal position.  God knows how high coolant temps would get before it starts to react. Useless. Ignorance being bliss.
Hope this is helpful.

Okay so this is terribly embarrassing but everyone deserves a good laugh for providing solid advice throughout this 2 week process. Thanks again everyone. 
 
The car is fine, it's always been fine, it's never overheated or ever gotten hot enough to require the radiator. I've probably got all the air out on all 7 odd attempts I had. The issue was (get this) the $20 sensor I got from eBay thinking naively that as it shares the OEM part number it should be fine. The sensor was reading an overheat situation before it got to operating temp. As such this is why the radiator was always cold. Thermostat never opened for it to get that far.   
 
I worked it out by giving it one final go tonight thinking the only thing I've changed is the sensor, lets put the stock one in and see how we go. I also purchased some AN fittings to make up a spill free bleeding system:



 
Let it sit like that for 2hrs with one 2min run in between. Cleaned the garage found some MR2 stuff I didn't know I had and then took it for its first run with cap on half click. Noticed it took longer to warm up and never went into overheat situation. Did another lap of block to make sure. Came home turned it off and left it sitting with a spill free funnel in the back so it can take more coolant as it cools down and air leaves. 
 
Thank you all for your help and support. Have a laugh at my naive expense and we'll all carry on as we were. 

Glad to see you got it sorted!

Been there many times - dive in to solve a problem and have the car half pulled apart when you realise it was something simple after all!! 
 
At least you have a proper bleeding set up on your radiator, will come in handy the next time.

On the bright side you'd be an expert at bleeding the cooling system now!