I want to start by saying thanks to everyone for their feedback. Please keep the opinions coming and I encourage anyone with experience with temp sensors (stock or otherwise) to give their feedback as well.
I think if you put it under the sp you will change electrode reach into the chamber. If you put it on a cooling line you could restrict the flow, both of which might cause problems.
The under spark plug sensor is very thin, it would change the distance the plug went into the head but it would be exceeding minimal. The bigger issue as doc pointed out is the temps would be too high to give an accurate reading of what is actually going on with engine temps.
The inline restriction would also be fairly minimal, I mean they are made for this exact purpose surely they flow as much or more than the segment of hose they replace.
I wouldn't bother unless you've actually modified the engine as well. Open loop cooling is going to vary the temp widely. Also, these engines are pretty tough. I would remove your factory sensor, and using a heat gun? Flame? Test it. I think maybe you check the ohms across it cold and hot. See if that works, then using it or another method, lanyard off, press start to start the computer. And see if you can verify that the light/buzzer works.
I'd rather verify the OEM setup over installing that.
I think the FSM has the procedure to do all this. I've never bothered to test mine. Maybe I should, but then again I've never had an engine overheat in... 20 years of riding.
So I guess I should explain a bit the history of why I am looking into this option. I recently had a problem with my temperature sensor, it was working intermittently. Depending on the day it would constantly (faintly) beep, or it would beep loudly even just after the engine had started and was still quite cool to the touch.
I pulled the old sensor out and tested it in a pot of boiling water. I watched as the resistance between the pin on the top of the sensor and the body of the sensor went from very high (almost infinite) down to about 4-5 ohms. The problem was that the sensor wasn't acting as a "switch" , as in it wasn't "open" or "closed" circuit. So if the resistance was in the Kohm range I would get a faint beep from the buzzer, if the resistance was in the single digit range I would get a loud beep. The key here is that it wasn't acting in a consistent manner.
I now have a replacement sensor that arrived yesterday from Nick (Tonka). I will verify it's operation before I put it in my boat.
As for the temperature being all over the place I am not sure I agree. I think there will be day to day variations due to the lake water temp changing. But I think on a given afternoon the temps will be quite consistent. Seadoo has graciously give us an oh sh!t beeper that should alarm at 200F.
I like to compare it to the dummy light on my wife's VW. If her oil pressure is low, it will illuminate saying hey dummy stop what you are doing. It works great for her.
My car on the other hand will give me oil pressure down to the PSI (or kPA) if I prefer. This allows me to see a problem coming and head it off before it becomes an issue.
On the water this could mean noticing an overheat before I need to be towed off the water.
My engine is stock now, but may not be at a later date.