It's just a matter of preference. The outgoing cooler line (the fitting towards the front of the trans on a C4) will be the hottest place to measure it and will probably be the first place to fluctuate, so if that temp reads good you know you're alright. If I didn't have mine in the pan that's where I'd put it. The reason mine is in the pan is there was already a threaded hole for it and I didn't want to introduce another place for a leak to potentially develop in the line.
I think I remember PaulS said to put it in the pan. This will give a more average temp. Coming out of the torque converter could spike a higher reading
I remember this also. I like the pan idea also. If the hole is already there then why make another potential leak point?
the temp coming out of the converter/trans and going to the cooler is useless because its going to the cooler to get cooled off. nothing but the cooler will encounter those temps. put the sensor in the side of the pan towards the bottom. ive done several this way. what i do is take a nail and use it to punch a small hole in the pan where i want the sensor. then i take a center punch and punch the hole larger to the point where its big enough to tap with the correct size pipe thread tap for the sensor. punching the metal inward gives you enough to have 3 to 4 threads. i will then use red lock tite on the sensor when screwing it in to the pan. it wont leak or back out with this method.