I think it makes most sense to measure the oil temp in the sump (after it drained through hot engine parts). It will still not be as hot as the max temps it sees around the pistons, but will hopefully be close enough. This is also where most cars get their readings. Alas, I would not want to drill a hole just for this on the pan.
The output from the engine to the cooler is almost identical to what you would read at the sump, but probably only when the thermostate is fully open. It would be nice to see how much the oil cooler cools it down to in the return line, but it does not represent anything about what temps you hit in the engine.
Since we install the oil cooler adapters upside down due to clearance issues on our cars, my thermostat was on the return line from the oil cooler, and since my oil cooler is huge, it was allowing high temps in the sump before it gets cooled down to 215 degrees by the time it hits the return line (my stupid thermostat starts closing around 230). I am getting an adapter with no thermostat and also a wax for 180 degrees being overnighted to me. I will choose and try one of them at the track, hopefully this weekend! If my oil temps drop by 30-40 degrees just by this change, I will have proven that installing the oil cooler adapter upside down (and thereby regulating temp of oil cooler return instead of oil cooler intake line) is a big evil
