I think you might be a little shy on the exhaust temp. Depends on the load but I think you're looking at 750-1300° on an air cooled engine. It'll melt nylocks, use pinch nuts (or double nut). Steel starts to glow red at 900°.
As far as air flow in the shed I have a 16' X 20' shed that is fairly tight that had mice last fall. Fired up the 318 JD with a 18hp Onan in there and shut the door. Took an hour to use up the oxygen and kill the Onan. I'm not sure if the lack of oxygen or carbon monoxide killed the mice but haven't seen them since. :bounce: