Do NOT put your temp sensor in one of the threaded pipe plugs on the passenger side of the bellhousing. These are dead-end circuits (test ports), so you will have no flow past your sensor. You will NOT get an accurate temp reading.
There are two important trans temps to measure: sump temp and "to cooler" temp. The "to cooler" temp (also known as "converter out" temp) will be the hottest oil in your system. To read this temp, install your sensor in a "tee" fitting that you splice into the "to cooler" trans cooler line (this is the UPPER line coming out of the trans). It is usually easiest to splice a sensor into the rubber hose portion of the line (up near the radiator). Make sure the actual sensing element is up in the middle of the flow stream.
The "to cooler" temp will fluctuate pretty rapidly. When the torque converter clutch (TCC) is unlocked, this will show true "converter out" temp, which will climb rapidly during high torque, low speed maneuvers (like launches from a stop, climbing a steep grade, etc.). Try to keep this temp below 300°F. When the TCC engages, the "to cooler" line is fed with oil from the trans sump, so it should read something close to the sump temp. Therefore, you will see this temp reading going up and down as the TCC unlocks and re-engages.
There is already a sensor in your transmission that reads sump temperature. If you have a scan tool that will read data using PIDs, you can program it to read this thermistor. The PID was A01B on older trucks, and it is B011 on newer trucks (2007 and later, I am sure, but I don't know how much earlier this code was used). This should return a signed 2-byte value with a scale factor of 0.015625. So you read a 2-byte value (like 11968) and multiply it by 0.015625 to get the measured sump temp in °F (in this example, 187°F).
Or you can buy an aftermarket oil pan (with a temp sensor port), or get a port welded into your existing pan, and install your sensor there. But if you gotta spend some more $$$ (for a new or modified oil pan), I think I would use the $$$ to but a programmable scan tool, use that to read my sump temp, and install the sensor into the cooler line. That way I could read BOTH temps.
I would generally suggest keeping your sump temp below 220°F for long trans life, and you usually want it in the 160-190°F range. Short spikes to 220°F (or higher) are OK as long as you don't run up there for long periods.
