They have to be very small and use extremely thin wire...

Exact, Steve, wires must be very thin, otherwise they also sink the heat and could give eroneous results. If potting material provides high thermal isolation, all the local heat can be removed by the wires of sensor. This happened to me once, when I wanted to measure a critical point of circuit, potted into large volume polyurethan. Temperature given by sensor was ridiculous low. When thinner wires were used sensor output showed an increased and much more realistic temperature.

Kai