I assume this is to keep the heater hoses from flopping around but seems like the foam would prevent air circulation and cause heat buildup leading to hose failure. What is expert opinion?

 

There will not be much air flow in that area as it is completely surrounded by the intake, heads and supercharger. As such, everything will nominally come to the same temperature regardless of whether it is "insulated" or not.

I put it back when I had my supercharger off.