I agree having the che on the top won't do anything because its so far away and theres so many gaps because the front is wired you really need it inside but it cant hang any lowers than the third floor.
If we are putting a che there, if u can take out the ramp to the third floor that would mean theres 100% no way of getting up there - just ensures the safety of not reaching the che really.
Also gives a little more space on the second floor.
Rather than blankets you might want something like tinfoil over the top of the bars just to keep anything off the light fixtures to save the fire hazard.
Also you could try coving some of the wire at the front so that theres less places for the heat to escape, but still a lot of airflow