[Ron61]

The first picture looks really bad but that is most likely the camera angle. Is the blue paint actually running like it seems or was that a part of the flash?
I never had any problem with my side pipes causing any paint or body change and they were stainless and got plenty hot. The waver could have been there before because of it not being prepped well. But if you think your side pipes are doing it, to have it painted again would be a waste of time because they will just do it again. Can you move them out and inch or so, or try putting a heat shield around them to see if that helps?

Ron