The thicker (12 mm) feeds the RV and needs to remain connected if you choose to run premix. It should run from the bottom of your tank, split into two lines and enter the starboard side of each engine. A vent/return line will run from the port side and back to the top of the oil tank.
I believe it's the hoses marked #13 here:
http://fiche.seadoowarehouse.com/se...eadoojb&a=161&b=9&c=0&d=-OIL-INJECTION-SYSTEM
You said the oil pumps are already capped off and the lines plugged?
I believe you are correct that the wire coming off the head is from the temp sensor. There is no actual gauge or light. High temp warnings are delivered via the buzzer. Those buzzers are known to fail now and then. There is a thread here about replacing them with a radio shack version.
My humble opinion on top ends is to not do them. The engines are old. Read up on the idea here and you will find that most people will tell you that a fresh top end on an old bottom end will not last, the bottom end will fail sooner rather than later. If the engine grenades and you put a hole in the case you will lose a rebuildable core, or at least it will cost more. Plus, you will have wasted all that money and time on the top ends. If you are in a rush, do an engine exchange. 400 to 500 for a top end vs 900 to 1000 for a rebuild, with warranty.
I had engine troubles this year, and considered doing just a top end. Everyone was willing to sell me the parts but NO ONE would agree to do the work. They all said the bottom would quickly fail and didnt want their names attached to that sort of work. I had it rebuilt for 900 in a week. Coincidentally, it was the right engine, it had obviously been worked on by the PO (the head bolts had obviously been removed before).
I vote you go the reman/exchange route with warranty and more piece of mind. Your wallet will thank you later.
Edit: you said the boat ran fine except the exhaust leak, are you sure you have the correct compression readings?