If the water jacket in fact has a blockage it would run hotter. If it had a 170* t-stat, it's too low & you are on the right track with the 195* one.
If the water pump is leaking at either of it's weep holes it's a great ides to replace it.
if not, & it's working I would wait until it needs to be replaced.
The only exception to this would be if you live in a really cold climate & don't have a heated garage. You'd want to maybe replace it now instead of waiting.
As far as no heat goes, the heater core is always hot in these rigs. (There's no valve in the coolant line, rather they just close it off from the ductwork) Check to see if all the duct doors are working, cables, levers Etc. After it's warmed up, see if the heater core hose barbs are getting hot, don't burn yourself but lightly touch the barbs near the firewall in the engine bay.
Another thing to think about is this mod, I have installed the replacement YJ blower motor from autozone part # PM102, & it's a drastic difference.
Chevy blower motor for YJ swap Napa#655-1039 PM102