I would run the 160 thermostat regardless....

What you have is a lean fuel condidtion....thats causing the surging....when you unplug the egr valve you are raising cylinder temps and that is causing the pinging...

First thing I would do is check the color of the plugs...You are probably going to have to jet it a little richer...

You may also have the 305 H.O model this can be noted by the use of and Aluminum hood (not steel) and and Aluminum deck lid too....

I had a 78 H.O. 305 and the whole dog house was aluminum as well as the deck lid....(magnet won't stick....just slides off)