There's a honda troubleshooting chart floating around on the web somewhere (I saw it linked from cbr250.com a while back) that describes all manner of strangeness to do with the temp guage. On most mid 80-mid90 hondas, the temp guage seems to be a good fault finding tool for shorts etc in the electrical system according to this chart.

Anyone else seen this? If I get a minute I'll try to find it, btu I think its safe to assume a loose connection somewhere.