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Are we talking about two different things here? The manifold shield is the two pieces of sheet metal bolted to the manifold itself with four bolts, to gather hot air for the (unnecessary) warm air intake duct to the air box. There is no insulation of any kind on these. The heat shields on the downpipe are another story. When I cut them off on an 89 240, due to rattling (it appeared to be the original pipe) there was definitely a white flaky substance inside them. It could have been fiberglass or some other non-asbestos material, but I don't know of any good way to find out for sure without sending it to a lab. I cleaned it up very thoroughly, sealed it in a plastic bag and put it in the trash. It is probably not a good idea to use an air chisel to remove the downpipe heat shields, as the exhaust from the tool will blow the white stuff (if any) all over the place. I used a hammer and chisel, and a pry bar to break the spot welds.
As further proof that the downpipe heat shields are not really needed, some aftermarket replacement pipes don't have them.
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