I finally found a floating pan that fits my 15G Blichmann kettle like it was designed for it. With the BIAB bag in place, there is JUST enough clearance to slide the pan in and it floats perfectly on the surface of the mash.
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I drilled and press fit in a piece of 1/2" OD SS tubing with a TC cap welded to the end on the underside of the cap as a recirc diffusor.
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I could see dropping in a disc of closed cell foam on the top for even better insulation and then I'd probably not use the kettle lid at all. Without the extra insulation, the air gap seems like a good idea. It's just a pain to connect the hoses with the lid as an intermediate barrier.
The main frustration that will absolutely need some workaround if I keep using a cap, is not being able to determine my recirculation rate. I have to lift the cap and it splashes like crazy. Oh, the other problem is that it's really hard to pull samples for pH and gravity. I used to just lift the lid and steal samples from the end of the loc-line. This can probably be solved by adding another tee and a sample valve but it's a lot of hardware to throw at a simple problem.