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What is the reason you want to pull it at 165?? Are you going to pull it out of the smoker and put it in the oven to continue to bring it up to temp? You are going to want to bring it up to around 195-205 in order to be able to pull it.
I would think so... I always finish my Butts in the smoker and never foil untill its completly done and i always get great bark. But I mentioned in another post I have finished in the oven wrapped in foil when running short on time. and the bark wasn't as Barky(for lack of a better word), but it did still exist.
I take it your talking about taking it out at 165 and foiling it then continue on to 200-205. Personally I do them both ways and I find that foiling gives me less bark but it is softer and for my family thats a good thing as they don't like the hard crispy bark. I also have stuck them in the oven after foiling when its more convenient to do so. Many people think thats against the BBQ rules but honestly once its in foil heat is heat and the foiled meat doesn't care where that heat comes from
Not foiled and Not Basted ....Some would say very hard bark
Not foiled but basted (mopped)....Some would say perfection (That would be me)
Foiled and steamed/braised/damn near boiled...Some would say very soft to nonexistent. HTH