Sorry for not getting back to you sooner... So the simple answer is yes it keeps the EGR valve closed thus allowing your engine to only consume clean outside fresh air rather than stuffing dirty air from your exhaust back through the intake to be burnt again. This is why the claim of running cooler, since the EGR (Exhaust Gas Recirculation) "air" is straight out of the combustion chamber and is extremely hot, This is going to increase engine temperatures and that is why the EGR "air" goes through a cooler which is cooled by the coolant from the same cooling system that is trying to cool the entire engine, as well as the EGR gases causes the intake air to be increased in temperature as well.
Basic physics of an internal combustion engine shows, cooler air and cooler fuel makes an engine more efficient. If you think about it, one gallon of diesel fuel in an open container sitting on a table at 70 degrees has "X" number of BTU's what happens when it heats up to say 80 degrees? It expands, did I gain fuel? No, but I spilled my BTU's all over the table thus making the fuel less efficient. Same thing goes for air, the hotter it is the less efficient it is. That's why we use coolers for everything.
The concept of EGR is trying to use up the unburned fuel molecules from the first pass through the combustion chamber to keep it from going into the atmosphere, but at the expense of efficiency of the engine. Fuel economy went down heavily when EGR was first introduced.
The sensor you installed is taking the place of the barometric sensor so it is fooling the computer resistance wise to not allow it to ever open the EGR flow.
Just keep in mind the manufacturer of the "Ugly Fix" states this is not for Highway use so if your state ever starts inspections on vehicles like yours, you could be fined.
By the way, if you have not modified your engine in any other way, you shouldn't be seeing any exhaust smoke. There could be many causes for the smoke such as air inlet restriction, exhaust back pressure to high, or your injectors may be worn causing bad atomization of the fuel so not all the fuel is being burned at time of firing in the cylinder. I will say though, if you change the injectors you will probably see a reduction in power due to the fact the amount of fuel will be decreased, but economy can be increased. (The tip of the injector holds a set amount of fuel, as they wear the fuel quantity in the tip goes up slightly hence the increase in power, but the tip is worn so the atomization is broken down as the holes are bigger, the fuel that gets pushed through the bigger holes, so it can't "spray" properly and this causes smoke.) Black smoke is incomplete burnt diesel fuel.
Air inlet restriction could be as simple as a dirty air filter or as complex as air routing through a grill partially blocked by added equipment. Exhaust back pressures are commonly caused by modifications to the exhaust system to reroute a pipe for body changes or incorrect muffler for an engine. These are easily checked with the correct tools.
Hope this long drawn out message helped you.
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