That is one way to run a probe set up. There are others but the usually way is to set the herpstat at 94ºF and keep the substrate a bit thin over the hot area and re check it. Personally I half bury the hot hide in the substrate and have just enough inside it to absorb any pee. I keep my herpstat at 92ºF and it gives me 90-1ºF unless the room temps take a nose dive then the interior temps drop too.

The other method is to place the probe inside where you describe the thermometer probe. The herpstat probe must not move (in any set up it MUST not move) I use hot melt glue to firmly fix it to the bottom. This will give you more contestant temps if you have great variation in room temps. I use both methods the later the probe has more opportunity to be moved so it needs to be really secure. I tack the cord and then cover the whole probe. and tack the probe cord down along its lengh.