I use the pipe insulation with OD of about 1.5". It pushes onto a slat (via its longitudinal slit). Two rows of tubes cover the whole lower grill. It's not really needed to cut transverse slits in it, at the vert slats. I secure it with a strip of Velcro near each end. Use one row from ten C down to zero. 2 rows (100%) below zero C.
These are the technical details. I'm happy with 1" and no fastening. It lasts firmly, tested many times on touchless hi-pressure car wash BTW - there are differences in dimensions and design of lower grill even within the same model and year of European Prius. Mine (black) - originally from France has five lower openings, the friend's of mine (white -purchased in Poland) has only four And they are more narrow (I suppose) than US versions. Whatever - the common idea is always the same
It will depend on your commute and such, but yes, you will notice an improvement in mpg in cold weather vs no grill blocking. One of the bigger issues is that you'll be able to turn the heater on sooner, since the engine will warm up more quickly, when you limit the amount of cold air entering the engine bay. Not that it gets very cold in the Bay Area, but I can turn my heater on a minute sooner and that is always nice. Further, when I'm in slow and go traffic, I can run the heater longer before I get close to 159F and need to shut it off to keep the car in S4 (which happens at 159F).