Firstly, Create Temporary Tablespace ... Extent Management Local will always be better than Create Tablespace ... Temporary.

Secondly, setting of Initial = Next and Pctincrease =0 for datafile of temporary tablespace is always a good way to eliminate fragmentation. However, I think a sort segment will seldom deallocate extents, so it will rarely be fragmental even though you set PctIncrease != 0.

Please correct me if I am wrong.