Stubs101 :
To much thermal paste can actually trap heat.
Unless the paste has extremely high viscosity, any major excess will get pressed out in fairly short order so the "insulation" effect would be rather short-lived in most cases.
I would be more worried about the mess it will create under the heatsink as mount pressure and heat make excess ooze out from the CPU-heatsink interface along with the associated reduction in mounting force from the heatsink "sinking" into the goo if it was outrageously overdone. With metallic pastes, I would be even more worried about excess paste causing short-circuits on the CPU substrate.