The standard location is the pan. New trucks with a temp gauges use pan temps. It is the closest you can reasonably get to the frictions and seals that you should be worried about cooking.
Put it in the cooler in and all you see is how hard the torque convertor is working. Even with a working cooler it will always appear hot any time you are on the throttle hard.
Put it in the cooler out and you just see what the return temp will be. Restrict the flow and the oil will spend more time in the cooler and come out colder while the actual temp in the transmission climbs.
Yep,
The pan is the best place, because that tells you how hot the fluid doing the work is.
If you put it before the tranny cooler you will be afraid to do anything. If you put it after the tranny cooler its lower than the pan temp. If you can't put it in the pan, then I recommend after the cooler.
At the end of the day, there is no point in putting in a guage unless its going to help you make a decision. Before the cooler, you just learn to ignore it because it gets scary hot really easy.
After the cooler, lets you know if your cooling system is working. This lets you decide if you have adequate cooling, and you find out if your working the tranny harder than your cooling system can handle ( but you can't rely on the temps you see posted everywhere, because they are pan temps).
Tom
Tom