It shouldn't make enough difference to matter for what you're doing, but If it's convenient you can try to get an extra foot or two of wire under the insulation as well, by running the wire along the pipe for a ways, or by folding the wire (gently) back and forth six inches at a time under the insulation. Depending on the wire and the sensor, the wire can conduct significant heat in some situations.
I should clarify my stripping comment, I'd only strip the 5/8"-3/4" where the shrink wrap steps up onto the thermocouple sheath so the whole sheath is metal to metal contact with the pipe.
Cool.
Got a link to your thermocouple & guage for it? The other ones look the same as my Hong Kong Ebay Specials, but I don't think they were selling the high temp stuff, at that time at least.
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