The pan is the last choice
If the temp sensor is put in the hot line as it leaves the trans on the way to the coolers it will read the heat in the ATF after it has circulated through the trans and been used by the trans. This will be the hottest place to read the temp of the ATF and the most reactive.
If you are driving in start and stop traffic or are backing a trailer around, you can almost watch the temperature of the ATF in the cooler line rise from the shear of the oil by the torque converter. The cooler line is the best location to read what is going on in the trans, virtually instant readings.
If the Temp probe is put in the pan, the you are getting the temp of the ATF after it has gone through the coolers and mixed with the rest of the ATF in the pan. This is sort of an 'average' temperature. It takes a lot of heating during in-town driving to raise the pan temp a little bit. In the meantime the temp in the line is up near the danger mark.
If at all possible put the temp sensor in the cooler line
Hope this helps, Greg L