Aftermarket water temp gauge reads low due to wire length

You are dealing with voltage & current that is practically zero. In the micro area. The wire gauge is practically meaningless. I'd looking at using shielded wires. And maybe lay out your sensor & gauge on the ground and run some tests with a kitchen thermometer in a pot of hot water. Your connections & noise are more likely problems - - if you even have one. 10 degrees between two water gauges on an engine may be completely normal.