Temperature in the reservoir is good, but best would be to plumb a temperature sensor into the water line just before the waterblock. Putting it into a T-fitting is convenient.
The P4's thermal diode shoud be okay as long as you only compare temperatures with others from that same CPU/motherboard/load-program combination. You can do a very rough offset calibration by plotting a graph of (CPU temp - water temp) vs. clockspeed. It should be a straight line that intersects zero degrees at zero clock.
For a load program,
this bunch is great. There are others around too, compare and use the hottest.
And always have a proof-reader.
Zog: I'm not bothered by pop-ups. When I click the thumbnail pics, the status bar said "Pop-up Blocked". No pictures for me til I told The Proxomitron how I wanted NinjaLane's pages dynamically re-written, then they were links like I wanted.