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You have the classic symptoms of a thermostat that is stuck in the open position. Change the thermostat and it's gasket (I recommend Toyota OEM for these parts) and your heat should be restored.
As for the hard starting when cold, I would check the "Cold Start Time Switch." You will need a digital volt/ohmeter to do this and the specs from any manual. If you are standing in front of the engine, the cold start time switch is located on a water port coming off the right side of the cylinder head. It is the one under the brown plastic connector. Check this before just replacing it. It is a dealer only part that runs around $100.
Mike
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