That speedo setup is spot on for 4wd mod buggies with a 7.5 or lower.
The RS's onboard temp idicator is MOST important, we don't care too much about case temps. It will tell you how hot it is on the inside which is what counts. I'd expect 5-6 led's when geared properly.
Also you MUST run the silver cap that comes with the RS Speedo. Your shrink over the posts isn't excessive but the guys are right when they say that shorts are rare if not non exsistent.
Motor getting hot is either overgeared or undergeared. It could also have a bad rotor which will cuase heat all over.
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