My blue Crees are always 2" from my plants. They love 'em and the trichs show it. I do get plant burn if they get within an inch though. They are only 1W diodes though. For higher wattages, different rules apply and there will be more heat due to lack of efficiency. The blues are the only ones I can't hold the back of my hand on. The intensity of the lower wavelength gets hot. There is a greater amount of energy emitted with blues. It is still not a problem in my cabinet in the way of heat. Most of the heat is going out the back of the LED and through the heat sink.
The MCPCB does not have an insulation layer either, at least not all of them, if any. Can you link me to one that has the thermal pad insulated from the rest of the MCPCB?
You don't lose more efficiency with higher water LEDs, as they generally just make the die bigger to accommodate more current. When we're talking about radiometric power turning to heat on a surface out the front of the LED, less efficiency would mean less radiometric power and less heat anyway.
I'm not sure where your misconception about MCPCBs comes from, but they are all insulated, that's the point of a MCPCB, and there would be no possible way to include electrical traces on top if they were not insulated. They're generally 1.5-2mm thick aluminum board, with a 2-3C/W thin electrical insulation layer, then copper on top for the electrical and thermal connections. I've soldered thousands of LEDs onto thousands of different MCPCBs, litterally thousands. There's no such thing as a non-insulated MCPCB, that would defeat the purpose of it's existence.