I suspect you will be fine with a temp mate - although I am in the PID is better camp.
The beauty of your little set-up is the small volume of the heat/ex - If you measure temp at the return to the mash tun - and control the element that way - the heat/ex will warm up and cool down really quickly in comparison to someone with a 10 vessel and super fast compared to someone with their coil in a 20L HLT.
You will get a little overshoot in the return temp, but that will just sine wave up and down... little over, little under, lagging behind the controllers on off cycle and depending on the differential you set. Once again, the over/undershoot will be pretty small because of the volume of you heat-ex. You mash temp will have a lot more resistance to temp change in it and as the wort return temp sine waves up and down.. the mash will most likely sit rock solid somewhere parallel to the x axis. All you need to do is work out the difference between where the mash temp sits and the return temp, and then you are right as rain.
I have stripped the casing off my K type thermocouple sensor, so now its just the little tiny metal blob.. I clamp this to the outside of the copper return manifold in my mash tun (above the liquid level obviously) with a plastic hose clamp, and tape some foam around the outside to insulate it from ambient temps. It consistently reads 1 degree lower than a scientific thermometer inserted into the actual wort flow... so my temp controller is calibrated down 1 degree to compensate.
In a bigger heat/ex ... I would say definitely a PID ... in yours, I reckon you will be sweet with an on/off controller.
TB
