Interesting approach, though not one I'd ever be inclined to experiment with. Regular round bars are about 1" (27-28mm) diameter at the outer dimension. That pipe insulation would add significantly to the OD. I'm guessing your plan is to install it to just one side of the bar. For round numbers based on eyeballing that picture, your ~1" bar would become 1.5-1.6" total OD if applied to just the bar tops...before you put tape on it. The greater circumference (would increase by the same amount as the OD) would cause the bar tape to be too short. Something else to consider, pipe insulation is designed to insulate and it is made with closed cell foam that isn't very compressible–thicker likely won't mean more shock absorption.

That is a long way to say, IMO, this is unlikely to provide the result you're looking for. Honestly, if the bumping and buzzing in the handlebar on gravel is bothersome, don't ride gravel. It's a feature of the surface. There are ways to reduce it, it is impossible, in my experience, to eliminate it.