Yes. The paste ensures good thermal contact between FET and heatsink so that the heatsink can do its job.
Btw, have you checked your 555 oscillation frequency? Simulation indicates that for the component values shown the pot would have to be set to less than 1k if you want the frequency to be 50Hz or 60Hz. If the pot is currently set near mid-range the frequency will be only ~13Hz ! That could account for components over-heating, since the transformer impedance would be very low.
It would be preferable to reduce the timing cap to, say, 2uF so that the pot would give a more useful range of adjustment.