A few comments:
On your vintage of MkII boat, you have an M35B (also called M35BC, since Westerbeke did some special electrical things for Catalina). M35 and M35A are different models from M35B, and those differences can be significant.
I think 180F is too high, especially at only 1800 RPM. I would not assume that the gauge is wrong, since temperature gauges are usually pretty good. I'm not sure how you could check this. Maybe there is a place near the thermostat where you could point an IR gun.
Before doing too much, I'd pull the thermostat and see what temperature is stamped on it. I remember reading some "folklore" that some people prefer slightly higher temp than Westerbeke's spec of 160-165F, so maybe the PO installed a hotter thermostat.
Aside from that, there are several other possible causes for high temperature. If your belt is slipping on the freshwater pump pulley, that could cause the freshwater pump to be circulating too little coolant. It's possible that your water pump bearings are going bad, which could cause friction and slippage (and leaking of coolant). This might also be why your coolant reservoir is low. I learned that one that hard way (and replaced my coolant pump) a few years ago.
Are you tensioning the belt properly? I generally need to tighten my belt 2-3 times per season. There are several ways to tension it (I have a unique way, but it's too much detail to explain now). I use a Krikit tension gauge and tighten to 50-70 lb on that gauge. As the V-belt gets old it tends to wear on the sides and get narrower, thus sinking into the pulleys further, which is why you need to keep pushing the alternator out. I typically end up moving the alternator out on the bracket 1/4"-1/2" per year. I do keep my belt a little tighter than some, because I found that any "wobble" at all between the engine pulley and the alternator causes subtle engine vibrations that transmit all the way to the shaft and cause wear in my stuffing box. But that's just my boat, and the higher tension comes at the potential cost of wearing out my water pump bearings (expensive) and belts (cheap) more frequently. I just bought a replacement belt from NAPA. If you have the original alternator (not an upgrade) the part to get is NAPA #15395 (note correction), and it only cost $5.49. I haven't tested it yet, since it's a spare for the genuine Westerbeke one that I just installed. The NAPA guy told me it's made for them by Gates.
What raw water pump do you have? Many here swear by the Oberdorfer N202M pump, and they work perfectly on older boats with smaller engines. However, Depco Pumps told me that it is only rated for up to 30 HP, and the M35B puts out 35 hp. Nevertheless, many people use them successfully on MkII boats with M35B, but there are isolated cases where MkII owners have not been successful (steam in the exhaust) and those owners went back to the Sherwood G908, which has a wider impeller providing higher throughput (at the cost of greater resistance on the crankshaft coupler, which some will tell you horror stories about). However, I'm sticking with Sherwood for now.
Key takeaway: Every decision you make has tradeoffs. Changing a part spec, belt tension, thermostat, or most anything else may solve one problem but create another one.