Ok, so my relocated IAT still was ticked off with the higher than normal ambient temperatures after I installed the FWI on my 01. I was about 30* over ambient idling in traffic. 10* or so on the highway cruising. I have the Iat right next to the filter.
So I figured the best way to fix this is to isolated the Air Filter from the engine bay heat.
I used spray insulating foam combined with 5 layer of the reflective bubblewrap insulation all the way around the filter. Turned out decent, waiting for the expanding foam to dry to see if it made any difference. In the 00+ there is a huge opening on the engine side of the fenderwell that allows hot air into the fenderwell. Not on my car.
I also created a new opening at the bottom splash guard of the fender to allow cold air in. It was enlarged to about 7" in diameter, I cut out a triangle section.
Once it drys I will remove some of the foam .