Sallee,
Insulating the exhaust system is actually a very good ideal. Your worry about higher EGT's is understandable, up unfounded. In fact, just the opposite is true. Our diesel trucks get most of their power from the hot gases that pass Thur the exhaust system, in route to the turbo charger. There they use the intense heat to spin the turbine side of the turbo, which intern supplies the energy to pressurize the intake air, force feeding the diesel engine. Insulating the exhaust system between the exhaust manifold and turbo, only makes for a more efficient system. The whole ideal is to keep the heat(energy) contained in the system for use. I have had several turbocharged engines, diesel and gas, on and off-road, this theory holds true for all. Why more people don't invest their time and resources in this area is beside me, the extra power and efficiency is both real and in-expensive. Another benefit of insulating the exhaust system, is reduced under hood temperature. This extends battery life(both of them), lowers wear and stress on the engine and also produces another power gain by lowering the intake air charge temperature. You can take it one step further by insulating the charged air system, which will lower intake air temperatures caused by heat soaking (the temperature increase the pressurized intake air system develops after it has left the turbocharger and before it inters the combustion chamber). I have played with several different systems, looking for increased power and lower under hood temperatures. Currently I have a combination of Thermo Tec products installed on my truck and have been able to document significant under hood temperature decreases, along with quicker spool-up and increased power. I insulated the exhaust manifold, turbine side of the turbo, and down pipe (pass the first bend). A side benefit, from the improved efficiency and power, was the lower noise and cab heat levels. I was impressed enough to continue further and fabricated several pieces that helped even more with the noise and cab heat issues. I used what I call heat Shields. They are aluminum pieces that mount to the exhaust system, and have been covered with several layers of both heat and sound absorbing material. They mount over the two (2) mufflers I have on my system, and reduce heat and noise which would normally be transmitted to the cab.