I've done it in 3 places...
The forward test port, the pan and the line out.
The pan and the test port will give you the same very low readings. My guage (Isspro) reads from 140 to 320. The pan and port read about the same but the hottest it ever got was about 160-170 on a hot summer day in traffic pulling a trailer.
With the sender in the line, the temp measured is much higher and fluctuates much more. Sitting at idle at a light will raise the temp to 200+ on a hot day in no time. Pulling a load up a grade (on ramps around here) is worse. You should see how fast it drops when the TC locks up. Then it will read 170ish if on a warm day.
Reality Check: On a recent trip to California, pulling a small but heavy trailer on the Needles highway in SD, I had the trans temp guage pegged. (Kick down cable not set right. ) Yes, the warning light does work. It turns off at 265 and on around the same temp. (Glad I updated the lines before we left!)
For the ultimate, put a sender in each location and switch between the two.
If you already have the line with the temp port (94-95), update that line to the one with the short section of hose at the block mounted cooler end. (Latest revision. ) Take the factory hose off (it has a check valve) and throw it or put it in your boonie box for a spare. Make up a similar section of line but use a 1/2" pipe T, a 1/2" hose barb to 1/2" pipe, a 1/2" hose barb to 1/2" (-8) inverted flare (same as an AN fitting for this size only), a 1/2" nipple (short) and about 6" of transmission hose. You will also need a bushing for the temp sender. I got it all with one trip to the local hydraulic line shop.
Install the T with the nipple in the block mounted cooler before the installing the sender as there isn't room to turn the T with the sender already in it.
You will end up with a hose section as long as the factory hose because theirs has the check valve.