For proper function of an IAT does it have to have air passing over it or can it just "dwell" in the air. The reason I ask it my new throttle body has an ideal place for it where the idle air control valve used to be but all it has is a passage from the inlet to see incoming air. I will have to block off the passage that goes into the intake to prevent a huge vacuum leak. Will it function properly here or should I just choose another place? I would really like to put it there if possible because it makes the system alittle more modular.

It should be in moving air... if its in a dead space
it will read what the throttle body is

Thanks Mr.P That's what I was thinking but I thought I may be thinking too much about it, I have a tendency to do that lol time to get a bung welded into the intercooler piping. Could I drill a hole in the intercooler on the downstream side and tap it to thread in there or would it be better closer to the throttle body. I'm trying to hide it or make it blend in so I don't have wires hanging from the piping inside the engine bay.

That's what I'll do then

Most of the factory cars from Chrysler would have the air intake temp sensor in the inlet air tube hose to throttle body or in the housing so the incoming air would pass over it. But they are called Intake Air temp sensor which I always felt it meant the temp of the air as its going into the intake. Most factory systems also use the ambient air temp sensor for outside air temp also and they were usually in the grille or around that area and some used a battery temp sensor for the temp at the battery for voltage settings. But I agree that it should be somehwhere to read the temp of the air coming in the intake so the air going in the intake moves past it.
I can tell you it can be very important and it gets overlooked alot. Years ago our Dodge dealer had a Lebaron 2.5 turbo car that kept pinging alot. The tech working on it tried everything and could not get it to stop pinging. He made sure the EGR worked and checked the timing curve over and over and made sure the eng temp was just right. But to make a long story short he called the Mopar tech line and talked to the one guy at the tech line who was really good. I remember well as he was British and a real nice guy who I became good friends with. But he told him to check the intake air temp sensor and if not sure to replace it. Bingo !! On the turbo model the eng controller (PCM) will give more timing advance on colder intake air temps but when the intake air gets warmer it will back the timing curve down. And this intake temp sensor kept telling the PCM the air was cold and it let the PCM give to much timing. Even though the eng temp sensor was working right as was the eng knock sensor with the intake temp sensor stuck in the cold mode it would still over ride the eng coolant temp curve. And boy you can hurt a boosted eng real easy with so much advance it pings all the time. Sorry to ramble on but that story came to mind when I read this post. Ron

I realize you're talking about boost here, but on the 3.9, 5.2, 5.9 Dakotas (and every vehicle with those engines) the IAT sensor is in the intake keg reading the air as it passes through one of the long curved runners. it taps into the intake manifold on the front side, just below the TB. I've relocated mine to the air filter to be sure that it does not heat soak and read incorrectly due to my aftermarket M1 intake. the provision for the IAT sensor was in a thick part of the casting and the portion of the sensor that was meant to read the air temp didn't stick out into the plenum at all.

On a intercooled EFI motor I would put it in the intake manifold so you see the actual air temps entering the intake ports Especially on a street and strip car where the intake will heat soak

Most of the time the IAT is only measuring the actual manifold temperature instead of the air passing through it. I too had to move mine into the air stream.

I have a 2" plastic spacer between the TB and the intake you think it would be safe to mount it on there or would it still heat soak it at idle?

If you can keep it in the airstream it will probably be a good place. The plastic spacer shouldn't transfer the heat like the aluminum intake would. In front of the TB would be OK too… or in the charge pipe leading there.