Aloha,
From your description of the temperature gauge declining performance and lower than normal readings, I would guess there is a small crack in the capillary tube. This is a direct reading gauge and is basically a thermometer. I believe it works with alcohol (maybe mercury) and a lose this will reduce the range of the readings. Over time the metal of the tube becomes brittle and fragile.
Kim is correct about Nisonger, I've used them and they do good work. Palo Alto Speedometer is another shop that repairs Smith's gauges, however I have not had an opportunity to need their service. Tony at the Autoist may have an operable used gauge, but he is probably busy ducking Ivan right now.
Safety Fast,
Dave