Normal engine braking (and even the compression-release "Jake brakes" on diesels, while more effective) doesn't develop anywhere near as much force as the wheel brakes. You're right that it does generate heat, but it's not a lot --- instead of purely compressing and releasing the compressed air, the engine is just acting as an air pump; the air gets compressed (and hotter) during the compression stroke, but instead of igniting, what would be the power stroke merely expands the air again to the same volume it had before, and then the exhaust stroke pushes it out with little restriction. I would bet that even if it's just idling, the heat of combustion will be far greater than whatever friction losses contribute to engine braking.