New Hotend V2 with Heater

Just got a new hot end and heater assembly. What I noticed is the hole in the hot end that the heater goes into is much bigger. 

Qestion #1   Is this normal to have a hole that is 0.025" bigger.   It just feels like a hot dog in hallway.

Qestion# 2   Would thermal paste be a good thing to use between the heater and hot end?  Wouldn't transfer heat quicker and more efficient to the hot end?

Your thoughts are appreciated