Paul,
I chased erratic oil temp readings for quite a while with mixed success. I wasn't seeing the extreme range you described. My issue was at operating temps (190 to 205 degrees F) the reported temp would be affected by the current electrical load. For example, by turning on a high load item like the landing light, the indicated oil temp would jump from 205 to 210. The higher the electrical load put on the system, the more the indicated oil temp would rise. Reducing the load would lower the indicated oil temp. Obviously this was an instrumentation problem.
It turns out I have a few millivolts running around on my engine block. This has probably been going on for the life of the airplane (a Long EZ 25 years old.) The problem didn't surface until the installation of sensitive electronic instumentation.
I have always had a #2 gauge ground wire directly from the battery to the engine block. This didn't help the problem. Since this small electrical problem seems to only affect the oil temp sender (due to it's extreme sensitivity,) I really got tired of trying to track it down. Instead, I installed the oil temp probe available from GRT, P/N FT-LC-01 which is compatible with the Dynon. This is a 2 wire probe that is electrically isolated from the engine block, the second wire being the ground.
With the installation of this probe, the oil temp reading is right on the money and reads rock solid, regardless of the current electrical load. This turned out to be a much simpler fix as opposed to rewiring the whole airplane.
Roger Johnson
LongEZ N34JR