[glend (Glen)]

Leon, here is what I know from direct experience with that engine. The 2.8L CRD used in the Colorado is almost identical to the VM Motori 2.8L used in the Jeep Cherokee for many years, and I owned one for over a decade. VM Motori was at one time part owned by GM, and licensed the engine to be used in other branded vehicles as well. I am a long serving (13 years) moderator on the Ausjeep forum and have dealt with this question there many times. The Colorado engine uses the exact same engine management system and sensors. So what you describe happening is exactly what the engine management system is programmed to do. Normal operation will see the temperature sit just below half way on the gauge. In situations where the heat rises the system starts to shutdown things in an attempt to reduce heat, and by the time it reaches 3/4 It puts the engine in limp mode to protect it. All normal behaviour.
This happened to me a couple of times in my Jeep variant, and here is how to avoid it.
Use an appropriate gear, the torque band for that engine peaks at 1800-2400 rpm, stay in that range, over reving the engine does nothing to help you but it does burn alot more fuel and this raises engine temperature even more.
When climbing hills, stay out of over drive mode, accept you may need to slow down, and stay in the torque band sweet spot.
Be aware that using the air conditioner actually adds heat to the engine, it is because the air con condensor sits in front of the intercooler and radiator, and it's waste heat adds heat to the intake air and the radiator.
One of the things the engine management system will do to reduce heat is to shut down the AC system at the 3/4 heat mark, for the reason I just mentioned.
Consider adding an EGT gauge, or Exhaust Gas Temperature gauge, this will allow you to monitor over fueling heat build up and you can program in alert points to remind you to back off the throttle. Where you insert the EGT probe matters, I recommend it be tapped into the exhaust manifold just above the turbo downpipe (pre-turbo), a good diesel mechanic can do this for you quickly or you can do it yourself if you have some basic mechanical ability. You can buy EGT gauges from places like ProSport gauges online.
I hope that helps. Chances are your engine is fine, but you need to know how to drive it correctly to get the best out of it. All to often I see people drive diesels like they would a petrol car, and it destroys them pretty quickly - more REVS is never an answer with a CRD.
There are some other heat sources you could also look at, like the transmission cooler. If you want to discuss in more detail then just PM me here and we can talk about it on the phone.
Good luck