yes, probably 10-12 hours after losing impeller is when the hose burnt.

I ask my question again. Should I lengthen the inner pipe if I lengthen the outer? If so, how much? Or should I just leave it alone and run the rubber?

You should not need to lengthen the inner pipe. No reason it should have gotten that hot. You really need to find out why it happened and go from there.

update
 

Just removed engine today to install new 540. I found that although I had back flushed thru the oil cooler with water, It was plugged solid with rubber from previous impeller failures. I don't know how it ever worked. I still think that I will extend the inner and outer stainless steel tubes all of the way to the tips and join tho outer to the tip with a short rubber coupler.