Honda Tech's-Ventilation system problem

I own a 2003 HCH with a manual trans.
I assume all HCH have the climate control System.
The heating system has some issues that can't possibly be normal.I bought this car used and this is my first real winter (http://www.cleanmpg.com/forums/#) in it.
First issue; When car is ice cold and fan set to "AUTO" it will blow out ice cold air at full speed (http://www.cleanmpg.com/forums/#). I have to assume there should be a sensor telling it that the coolant is cold? Very uncomfortable...
Issue 2; Once up to operating temps the system will continue to blow HOT air until it's like a sauna before it turns itself down. I have to turn the temp knob all the way down before it is bearable, if you turn it up again even just a few degrees it becomes a sauna again
I just can't believe it's working correctly.
Anyone have any ideas as to what is malfunctioning?
I'd prefer to not pay $105/hr for diagnosis fees
Thanks in advance.
Eric S.

Check the coolant for air packets.

Check the coolant level.

Good luck,

Sam