The fluid is "working" and being stressed while it is in the converter. After this it is discharged into the cooler circuit, so monitoring here is what tells you how hard the fluid is being worked. The fluid in the pan is virtually the same temp as the trans itself. Not sure what benefit knowing that is, plus as stated, the efficiency of the cooler or lack thereof can effect that.

Will a blanket effect the heat? Of course it will. Aluminum rapidly dissipates heat, that's why we run an alum pan vs a steel one. So you put a blanket on your alum case, it makes it dissipate heat slower. That's basic physics and thermo dynamics. Will it make it too hot for a street car?.......probably not