I love me a bottom drain but I think an issue is probe is located above the drain. The liquid flows down along the sides of the MT and flows along the dome and out the drain without getting heated by the element. In addition, with a slow enough flow rate, the liquid that is heated by the element actually rises, setting up a current, in theory, like this side view:
View attachment 327572
One way to test this would be to run with just water, at the recirc rate you use, and without disturbing the water too much, drop in some food coloring drops with a long pipette. Try from about element height along side. Also try from about element height about halfway between side and center. See where the drops go. Another test would be to run with just water, as you did with the mash (same recirc rate), and see if you get the same temp variation/oscillation. Then, max out your flow to maximum, and see what you get (shorter peaks/faster oscillation). Yet another test would be to run with just water, as you did with the mash, and use an accurate temp probe and snoop around to see what are the different temps throughout the vessel.
This make sense?