The plugs that are used in the peepholes are not put in to prevent heat loss, but to stop air from entering the kiln.
The observation holes of the kiln allow viewing of the firing chamber and pyrometric cones. They also provide an escape for water vapor and gasses.
Peep holes in your kiln are used for observing the firing process so that you can see when the cone bends and when it is time to turn the kiln off if you do not have an automatic shut off.
Peep holes have a secondary function in that they draw oxygen into the kiln, preventing reduction, and carry off smoke and water vapour.
It is not necessary for your peephole plugs to fit tightly, as it is good to have some air entering the kiln at all times. Peepholes should be as small as possible to control the air flow, but large enough to see the cone clearly.