Q: What will effect will installing a 160 degree thermostat have on my TPI engine?
A: What effect the 160 stat has on the engine/computer depends on different factors. In terms of achieving closed loop operation, the oxygen sensor plays a more important role – it will not function until the exhaust temperature is at least 660 degrees F. To a degree this is a function of the coolant temp, so it is possible that abnormally cold coolant temps can prevent closed loop operation.
If the coolant reaches 160 degrees, there should be no problem, as the torque converter lockup AIR, and EGR function at temps over (approximately) 150 degrees F. The trouble is that overcooling (and subsequent chronic open loop operation) is much more likely with the colder stat, since you are running that much closer to the "crossover" temp. This is especially true in colder climates, where the ambient temperature can contribute to the overcooling problem. A 160 stat is probably not a good idea if the ambient temperature is below 75 degrees F, or if a significant percentage of the driving time is spent on the highway. In that case, go with the 180 instead.
Aside from loss of converter lockup, AIR, and EGR operation, overcooling can cause an abnormally rich air/fuel ratio, which at best will make your fuel economy and performance suffer, and at worst will destroy the catalytic converter. In any case, the colder stat is not much good without changing the temperature at which the radiator fan activates. During city driving, the fan will simply wait until the coolant reaches 225 degrees F to turn on, which is what you were trying to avoid in the first place.