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Hello and welcome to Just answer,
The IAT is part of the mass air flow sensor(MAF), the MAF sensor is located in the intake tube between the throttle body and the air cleaner.
If you need the pin out chart to tell which wires are for the IAT let me know
Yes it is a bad idea, this "performance module" is just a fixed resistance to fool the ECM into thinking the temp is cooler than what it is and then the ECM dumps more fuel.
You can't leave it unplugged the 3 of the 5 wires still need to be connected to sensor.
MAF Sensor Signal
Ignition 1 Voltage
IAT Sensor Signal
You would need to cut the factory harness for the 2 IAT wires and reconnect the MAF connector,
The MAF sensor also works off of air temp to calculate air flow, that is why these 2 are together, if you fool the ECM the you are also fooling the MAF.
Dumping fuel is a bad Idea, fuel is expensive, It can damage other parts such as the convertors which are also expensive. Your engine will run as if it is in open loop, where it is not fuel effecient.
The only correct way is to tune the entire engine management system to compliment each other, If you gain performance you sacrifice fuel ecomomy.