What you're doing is fine. Most people will wrap, at the point that you're at, and then continue to cook until the internal temp reaches 200 degrees or so. Most will also add a little liquid (apple juice, Coke, etc.) to the bottom of the foil, when wrapping, to help keep the brisket moist. Wrapping isn't absolutely necessary but it does offer a more forgiving environment in finishing the cooking process of the meat. Once wrapped, you can finish it on the pit or, as some have said, you can put it in the oven. The brisket doesn't really care where the heat comes from but the oven is generally easier, especially if you using a stick burner that requires constant attention for fire management.

Use the internal temp as a guide line. Every brisket is different and tenderness is what you're looking for. One might be perfectly tender at 190 and another may need to go to 215. At around 190, use a toothpick to start checking the tenderness of the meat (you can do it through the foil). At the point when that toothpick feels like it's sliding into butter, the brisket is done and it's time to pull and let rest.

Whether you're doing a small flat or a large flat, the cooking method is the same. The time will vary because of the mass of the meat but either can result in a great piece of meat. If smaller flats satisfy your needs, then stick with them. With practice, you can be turning out a quality product. Your brisket, when you sampled it at 160, was chewy because it wasn't done yet. It will not be chewy when cooked to the proper doneness. You just need to let it finish.

I, also, like to leave some fat on the brisket to aid in keeping it moist while cooking but I know a number of competition cooks that will trim every bit of fat from a flat. They do this in order to coat the entire surface area, of the brisket, with their rub and also to get a visible smoke ring all the way around the cut of meat. They can turn out as juicy of a brisket as you'll every eat. It's just all in mastering the technique.

Good luck!