First, I've got to ask.....what does "'83 interior, '89 S2 motor and exterior" mean? You have an '83 with a '89 S2 motor and some exterior add on parts? Why not just say, '83 with S2 motor, or something like that? You do have the early chassis.....right? I'm easily confused.
On the early, the lower lever controls the temp in the car by opening/closing the heater valve at the back of engine block. On the early, if you have the dashboard out, most of the hard work to get to the heater core is already done. You do have to remove the heater box, with the water hoses still attached to it, then you can get the core out/replace hoses. No need to remove any of the AC thats adjacent to the heaterbox. Its completely seperate from it other than one tie up duct that you'll see as you go. When I did my '83, I found one of the directional valves in the box to be out of whack, repaired, put all new open cell foam seals on duct connections and such, new core/hoses, and new heater control valve. I don't even know what this "two bolts thru the firewall" thing you've heard is. Not anything on an early. "frozen".......check cable to valve, and the valve for proper connections/routing.