Thin walled exhaust tubing looses a lot of heat through radiation and conduction to the environment. For a well designed naturally aspirated (non turbo) exhaust system, keeping the heat energy in the exhaust gas is generally a good thing. More energy in the exhaust translates to a lower pressure return pulse and better scavenging of the cylinder at valve overlap.  Insulating the exhaust tubing reduces the heat flux  and keeps the exhaust gas hotter and the engine compartment cooler.

If the insulation is applied to the outside of the tube the metal will be hotter than without the insulation. Hot metal is weaker than cooler metal and it corrodes, erodes, and cracks faster.  If the insulation is applied to the inside of the tube the metal will be cooler that without the insulation. The problem in applying ceramic coatings inside a tube is that it is difficult to clean, coat and inspect inside a curved tube.  Ceramic is also friable,  brittle, abrasive and is not known for good adhesion so we can expect pieces to break free. In a naturally aspirated engine this is no big deal but in a turbocharged engine it is a very bad thing. Turbines will object to a diet of ceramic chunks.

IMHO I would never insulate the outside of an aircraft exhaust system, except a race plane, where performance is critical and inspections are frequent. I would never coat the inside of an exhaust system on a turbocharged engine. Coating the inside of a naturally aspirated exhaust system, especially the first six inches, is probably a good thing.

Merry Christmas.

Brent Regan