I've done it my way, and I don't know to this day if it's still intact or not, but as of the time I sold it, it was fine. I even unwrapped it to show the guy that bought the car, because he said the same thing. I'd already had the pipes wrapped front to mid section (including the cat) for about a year, and the hi-temp coating was still on them when I pulled the panels off. I put aluminum backed fiberglass up against the body in the exhaust tunnel, then put the exhaust back on, tucked into the tunnel as far as I could get it, and made shields with some pieces of metal to hold more aluminum backed 'glass up against the pipe, so it made a mostly air-tight shroud of insulation around the pipe. It's a lot of work, granted, but it's cheap.
I've never tested the effects scientifically, but I felt as though I was getting more grunt out of the Buick 350 (198? Delta 88 swapped from a 307 C.I. Diesel before I bought it.) on the low end. It also seemed quieter in the cabin area, and had a stronger exhaust note from the rear of the car, it seemed.
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"¿ʞɐǝɹɟ ɐ ǝɹ,noʎ uǝɥʍ 'ʇı ʇ,usı 'ʎlǝuol s,ʇı"
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