Thanks for posting the pics Glenn, it was very easy to see what your question was about with the pics included. Hammer says that it meets code, and I don't necessarily disagree with that comment. However, I know that if it was my house, I would want something wrapping that just so I could sleep better at night. My suggestion is to get a couple of sheets of thin Durock and cut them to fit each side on the outside of the framing. Screw those into place, and voila, you are done. I recommend buying a diamond blade for your circular saw and cutting the Durock that way, although some people score and snap it. DO THIS OUTSIDE!!!! You might spend 25 bucks for a little peace of mind. It shouldn't require more than that to get this done.
There should be no leaking fumes, and metal stacks like yours are usually double walled, so I do not see heat being a big issue.
Hope this helps,