If you do have diesel thinning the oil the diaphragm of the fuel pump is probably ruptured, if this is so you should see a rise in the oil level as well.
On the rise in temperature, if you have a heat exchanger on a 22HP 3GM you have a 3GMF. I found I had the same problem with my 3GMF and it turned out to be the small elbow on the water injection into the exhaust elbow. These engines also suffer from the exhaust elbow itself becoming blocked with carbon and corrosion. The heat exchanger is of course another point to check as you already noted.