Thermo induced cracking... the heat you are not emitting ... you are keeping in the pipe itself ... on higher grade stainless not a problem that's why you goto a higher grade to begin with...
304 isn't known to be that great at thermo cycling and will crack. The more heat contained within the pipe it self the more Stainless will "MOVE" from expansion.
Perfect example is when guys thermo wrap Mild steel headers... the headers will actually crumble with the higher temps contained within the piping.
On a downpipe .. not that big a deal as it wont get nearly as hot as the headers will.. but I wouldn't coat stainless headers
You are 100% right when it comes to properties of steels and how they react to heat. As someone has been into cars for over thirty years and a welder at a nuclear site where 95% of the metal used is 308 stainless for integrity purposes I have seen various issues with various types of steels from cold rolled carbon to the aforementioned 308 varieties.
I'm also a CWI [certified weld inspector] and have some knowledge of metallurgy and the effects of heat/cold and tensile strengths amongst other properties and effects of many different types of metals.
Without getting into all the scientific mumbo jumbo of different metal grades and the properties I will only say this: every heat cycle you put in your exhaust brings it closer to the failure point.
How fast this happens depends on how much heat is put into the metal, how fast it is cooled and also how much vibration is present at the various heat levels. Typically the failure point will be at or next to the welds because the metal is harder/more brittle from the heat of the welding process.
The hotter you get the system and the more often you do it will dictate the failure rate as well as the type of base metal used and the design of the components. For instance, Joe may have a set of one off headers and be made of 304L SS and you have a set of mass produced 308L SS headers, but Joes has a better weld quality and less stress because of a well thought out design for his particular application.
He may also run his exhaust 3/500* cooler than you [just an example] so therefore even though his headers are made from a less desirable material they should last longer because of the design and environment they are used in.
The hotter you get the metal and the quicker it cools down [drag racing] will have a bigger detrimental effect than say just a couple grades difference in the metal being used and the occasional 1/4 mile blast and still being driven so the temps come down slower [tempering] VS. fast cool down which would be considered quenching.
The header wrap on steel headers is a bad example because it destroys the mild steel by trapping moisture and corroding the steel [rust] which only accelerates the natural process of what happens with mild steel headers.
