If you do go the heat wrap way, you'll need to wrap as much as you can.
The piece of the 2WD exhaust manifold that joins to the turbo will definately need wrapping as otherwise you start melting all your cables etc. and you would probably be well served to wrap as much of both parts as you can.
Or there's that ceramic coating...
The heat shield way is good. I have a combination of cut back standard shield and exhaust wrap. Probably still have more heatproofing to do as well.
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