the wax on the thermostat should be on the engine side. im not familiar with the details of the Lxx themostats. the LT1 therm is different than a sbc, but im not sure about these.

i think the plunger should move away from the engine b/c as the wax gets hot, it swells and opens the therm. im not picturing it very well.

it should look something like this... ls1 thermostst