91 Honda overheating, I'm stumped

Hi folks,

I have a 91 accord LX sedan. When driving on hwy my heat gauge starts to move up to 3/4-7/8 level. This is without A/c on. When stopping, the car radiates heat seems to be much hotter than it ever was. Checked bottom hose to see if thermostat was allowing coolant through and yes its very hot so seems to be working. Replaced radiator cap. Coolant bottle is filled and gets warm so water is circulating thru cap to bottle.
Now strange thing is when I turn on my car heater on to hot air the gauge goes back to half way, but I sure get warm in the car especially when its 35* outside. Also when doing this the engine actually seems to cool down noticably. Can anyone suggest a fix or what to look at. Thanks.