Hi Tim -
Certainly the 10 mm lines which lead from the hx outlet to the group and then from the group to the hx inlet are a part of the thermosyphon system as the below diagram illustrates.

The "engine" which drives the thermosyphon system during normal idle conditions is the boiler water. After a flush of water through the group, the water in the hx is cooler than that in the group and the group becomes the "engine" of the thermosyphon system. This is why grouphead temperatures start to drop at the conclusion of a shot as the group, in conjunction with the heating element is adding heat to the water in the hx.
For sure, insulating the lines as you have done reduces the amount of heat offered up to the inside of the machine by the two 10 mm lines. At this point, I am unsure of the total effect this might have on the thermosyphon system but it does seem as though the pstat cycling period would increase, say from 40 seconds to 60 seconds - just a guess.