If your coolant stops flowing, I don't think the CTS location is as important as the position of the gauge sender. The only remedy to this problem is for you to turn the key off. Nothing your PCM can do will keep the engine from melting down if you keep it running without coolant flow. The water pump probably isn't the best location for a CTS, but it seems to have worked for GM in this application. It wouldn't hurt anything to move it into the head, though.