It's a knock sensor, not a temperature sensor. Vibration--the result of detonation pressure-spikes ringing the combustion chamber(s) like a bell (heard all the way in the passenger compartment as "Ping" or "Knock")--travels very nicely through iron.
And...GM being GM...the hole was already there, unused and plugged.
Infrared thermometers are notoriously inaccurate. Aside from largely being cheap Chinese, there's also the emissivity of paint to contend with.
I looked all over the Internet for a photo of that. I guess I wasn't using the right keywords. I read about this years if not decades ago, in the Chevy Power book, 8th Edition.
www.amazon.com/Chevrolet-Power-Prepare-Engines-Performance/dp/1557880875/ref=sr_1_1?
Water pump
pressure side drilled for outlets, leading to the "siamesed" exhaust ports, adding coolant that doesn't have to squeeze through holes in the block/head gasket/cylinder head. I've also seen photos of the hoses leading from the block drains, where the cool coolant from the block is re-routed to the hot cylinder head, bypassing the head gasket.
But again...there's mods to the block deck and gasket that can also improve coolant flow there.