I have 2 replacement Hall Effect Sensors that I'm going to install on the existing plate. 

My question - if the harness up to the plug under the tank looks OK, is it OK to solder and heat shrink the new sensor wires down by the unit itself? Or should I bite the bullet and replace it all the way up to the plug?

I don't see why not just use a good hot iron and do it quickly to avoid any heat getting to the sensors.

Thanks for the help everyone - I love this forum

Another question - do I need high-temp heat shrink inside the hall sensor cover? I sort of assume I do (and the oilhead guy's guide says you do) but just double checking. It's $18 from amazon including shipping and I can't find it locally (or if anyone has recommendations about what stores might sell it...)

I'm not clear on what "high temp" heat shrink tubing is.  I always use heat shrink tubing to insulate wires I solder or otherwise am working on.  I get mine practically anywhere  automotive hardware is sold.  I've got a lot from Harbor Freight Tools too.  
If you are using the installation guidelines that describe swapping the hall sensors on an Oilhead BMW, keep in mind that a K-bike Hall sensors probably never sees the heat the Oilhead does.  On the latter, I understand from word of mouth that the sensors fail more often.  And, a friend who owns a R1150RT found when he replaced his hall sensors, the wiring that carries the signals up to the rest of the loom was fried too!  He replaced the whole lot. I think you should examine that wiring when you replace the sensors, but it'll probably be serviceable.  Good luck!  And, do let us know what you find when you do the work.

if I can add something...if you are replacing just the sensors ...maybe with the plate already attached ...but not the connecting cable...and have to solder the cables together ...try using double wall glue lined heat shrink ....it has a 4 to 1 reduction ratio (instead of the normal 2 to 1 ratio )( with heat applied ..and the glue lining will seal out the nasties that exist inside the timing cover .
the rarely noticed  but contributing to failure of the connection cable usually occurs  under the hall effects plate inside the timing cover ...  what I have noticed is that the insulation of the cable deteriorates ..by compression and age ..possibly causing breakover of signal for the hall effects to the chassis earth side ..

be careful how the cables are laid inside there ..and make sure that you do use some form of retension (saddle etc ) of the cable to keep the cable in the right place ...free of crossing cables being crushed and what we call mechanical relief from being stretched or rotated ...un necessarily..

good luck with the job

OK cool - I'll just use regular heat shrink (I have a ton), or maybe get some of the glue type mentioned. 

Doing this today, will post pics when I'm done. Thanks everyone.

Have you read the detailed instructions on replacing the HES?