Thats exactly right.The water will always flow,either through the small loop (closed thermostat),or through the skin tanks,(Open thermostat).The beauty is its automatic, no manual valves to open and close. No pipes to feel to see how hot they are etc etc.
On another note, I have also found on ebay and in line temp sender,so you just cut a hose, put in this sender and use this to connect to a water temp gauge so you can keep your eagle on how its all running. Relatively simple, cheap and hopefully effective.
Will keep you posted on how it all works.