Insulation is a good idea, but unless you live in a very dry area I'd get it ceramic coated instead of wrapping it. The pacesetter is mild steel and from what I've read and seen it doesn't hold up to the condensation which collects in the wrap.
I really don't think you need to worry about the exhaust being too cool. Given how much faster the gasses are going to be moving the temp will probably not vary much and N/A exhaust is pretty hot as it is (hence the unheated sensor). If you want to really dig in you could install a portable EGT in the bung and go for a drive. Optimum temp is around 400*C.
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