Second, it helps to dissipate the heat generated by the exhaust gases. Wrapping might help to protect external components located along the exhaust path, but could wreck havoc with the various systems tied to the exhaust. The exhaust manifold should receive all the relatively cooler air it can get.
I'm not sure what system it could "wreck [sic] havoc" with.
The cats will most likely benefit or have no change from being a few degrees hotter. If we were talking a 40+ degree difference then there may be concerns about damaging them, but wrapping the exhaust is unlikely to cause that big of a difference in temps.
The only other thing is the O2 sensors, and several people have mounted those (on their 93/94's) in the PAIR location, which moves them upstream into hotter temps, with no apparent ill effects. You might knock 10-20k miles off the life of them....but considering that people are replacing O2's at 100-150k (or even higher) for minimal to no gain, it's unlikely that it'll make a significant difference.
On the other hand, all that heat can wreak havoc on all sorts of fun stuff in the engine compartment. Wiring harnesses, hoses, electronics....all those and more are potential failure points due to heat.
So by wrapping the pipes you may increase your chance of cat or O2 sensor failure (unlikely), but in either situation it will have exactly zero impact on being able to drive the truck. Might affect your mileage, but that's likely the extent of the failure.
Not wrapping the pipes could cause (potentially) failure in wiring harnesses or hoses (the two common trouble points), and those certainly can affect the way the truck runs, even to the point where it can no longer be driven, or driving it runs the risk of even more serious engine damage/failure.
All that being said from my research wrapping the pipes is not a good choice. Most wraps don't hold up, many can soak up flammable liquids (oil, grease, gas), and many can fail (IE: falling apart from water). Additionally they can trap water against the exhaust manifold and promote rust.
The better choice is clearly to ceramic coat the exhaust manifold. It provides all the benefits of wrapping with none of the downsides......except for cost, which can be fairly high (compared to wrap).
(A linkie for those interested in ceramic coating. The company in question makes some interesting claims: http://www.highperformancepontiac.com/tech/hppp_0810_ceramic_coated_finish/index.html )
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