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Don't quote me but I recollect reading that oil starts to break down and lose it's lubricating properties at about 280 degrees. If 280 degrees is corrct and you are curious about the heat in the tranny behind your 6.9 or 7.3 give this test a try. Note: I haven't tried these tests myself.
Make a long hard pull to push the tranny to the max. Stop and crawl under and carefully touch your hand to the bottom of the tranny. If you can leave your hand in contact for 4 - 5 seconds you likely don't have a thing to worry about. If water boils off the surface it's above 212 degrees. If it's too hot to touch but water doesn't boil off the surface you might want to try the next test.
A. Put your hand about an inch from the tranny and count how many seconds you can leave it there. B. heat a cast iron pot in your home oven to 200 or 250 degrees depending whether the water drops boiled or not, remove it from the oven and allow aproximately the same time as it took you to stop and crawl under the truck. Next count how many seconds you can hold your hand the same distance away from the pot. If A is less than B the tranny was probably hotter than the pot.
Depends where you have the sensor located, in my opinion the only place to locate is on the out - let line to the cooler (in the pan the fluid is already cooled) I run at 180 all the time, freeway or town as I have a trans cooler mounted in the front bumper with a fan. Every now and again it will get up to 200 when pulling the horse trailer loaded. When you get in to the upper 200's the seals are affected in the 300's the fluid starts to break down. The cooler the better but not below 100 as the viscosity is effected.
Most the applications that I have seen have placed the sensor in the right side of the tranny (driver's side). This seems like a simple application since there is a 1/8" port there. I too have added an aftermarket tranny cooler. Do you have pics of how you put the temp sensor inline?
If you need pics will see what I can do. All I did was get a "T" and 2 (5/16 I think) compression to pipe thread fittings. Cut out about 2 inches of the trans out-let line (front line out of the trans to rad), Compression fittings in to the "T" and join the lines. In stall temp sender into the other arm of the "T". If you are running a turbo with the larger down pipe install further up the line (at idle you may be reading high from the exhaust heat) Or you can do the same with out cutting the pipe and go straight into the port on the trans. Hope this helps