Antec 300 mid tower with stock cooling on low fan speed
Antec TruePower 650w
Intel i5 2500k @stock w/ stock heatsink
4 gigs of cheap patriot (no heatsink)
EVGA 450 gts
When using the RealTemp utility to measure my individual core temperatures one of my cores  actually drops to a low enough temperature to be at or slightly below room temperature ~72f, 22c while all the rest reach a healthy minimum of 27c (reasonable).
Is there something wrong with the temperature gauge in my processor, and can someone explain what is happening here?
A single program to check your temps doesnt give us enough details to tell what the source of the issue may be, use HW monitor, and core temp as well and see if they all agree that that core is dropping down to 22C, it might just be that real temp is reading everything a bit low.
As for the bonus question, i like it, i switched my machines over to it a while ago and it hasnt disappointed.
The variations you shown by Realtemp are well within the norm. Your heatsink is almost certainly not planed flat and so cools one core more than the others. I say this because you say the heatsink is stock, if you'd had an aftermarket cooler I'd say the paste has been applied non-uniformly.
All of my coolers have had similar variations.
You are fine
The temperature readout also changes by 4-8 degrees on a dime (from hanging with the average of the other three cores to the extreme dips I see here), the graphical representation would have MANY peaks and valleys compared to the relatively flat readouts from all the other cores(from the widget that coretemp has). Still think there isn't a problem?
EDIT: how is it even possible to have a 12c disparity between two cores less than an inch away from each other?
Yes, I am absolutely certain there is no problem. The temperature variations could easily be;
a bubble in the paste
an irregular curvature in the heatsink or the spreader filled with paste
that one core being assigned more work by the software.
Even though no harm is happening to your CPU, if you truly want to test;
Pull the heatsink, clean everything with solvent (alcohol works for me and most people), reapply a THIN LAYER of quality paste (there are dozens but I am a fan of Noctua, Prolimatech, OCZ Freeze, MX2, etc), and remount. Your finish should look like the bottom picture in this write-up.
If you are still concerned after that, I would recommend an aftermarket cooler (I am a big fan of Noctua, Prolimatech, and Xigmatech), which, may not cure the variation in the CPU temps if the "problem" is caused by the CPU spreader not being perfectly flat or software related, but it will lower them overall so that you have more peace of mind.