"Would the smaller, newer style sending unit work with the gauge in my ‘56"
Simple and honest answer is no.
1956 and 1957 production used different electrical circuitry for TEMP gauges. The sender has to match the gauge and harness.
If you have the 57/ smaller sending unit insert, it can be reamed and threaded for the 56 temp sender in the car.
Another thought why FORD put the sender location at the cyl head is that the actual coolant temp is going to be greater there (as a result of two center cylinders exhaust valve placement) than it will be at the front of the intake at the coolant crossover. Different placement may also mean the gauge will read differently (as gauge/sender may be calibrated to read the temp coming out of the head). Different sender placement would affect aftermarket gauges also.
SBC used the same basic idea.
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