A new engine is required.... on engine start ups it would start at Cold and then rise 1/3 of the way up when the engine was warm. I did notice that the day before my engine went kaplooie (and only that day, never before), the temp gauge needle would rise from 1/3 to 1/2 above Cold during driving, but it never reached the Red zone. I'm pretty cautious when I drive, trying to keep rpms never above 3000 and not going over 100kph on the freeways.
Damn, that's no good. I thoroughly recommend a crate Hyundai D4BF engine, if you can justify the expense.
Your temperature gauge sounds like it was behaving normally- they usually sit around 1/3, and will rise when climbing a long hill.
If I had to guess I'd say your head gasket blew and the coolant went through the cylinder, possibly damaging the bore and making it more prone to seizure, which happened once the engine overheated. If the coolant level gets too low the sensor isn't immersed in coolant and won't register the true extent of the overheating.
It's good to treat the engine with respect- it is an old design- but the occasional rev out to 4000rpm when it's hot will clear the shmutz off the valves.