Actually, the temps inside the engine go down over all. The exhaust temps rise though because the mix takes so much longer to burn that it's still burning as it is exhausted from the engine. That's how you can burn an exhaust valve by running to much N2O.
The added amount of Oxygen released in the burn inside the cylinder causes cylinder pressure to go way up. Increased pressure, increased fuel, this is a bad time for detonation. That's the reason for colder plugs...
Just FYI, it's not Nitro, it's Nitrous or N2O. Nytro is short for Nitro-methane which is a totally different beast all together.
