Depends on the psu. A quality psu will have overload protection and will shut down and should not harm the psu or any other component. An el cheapo on the other hand may short out, throw power spikes down the componet lines taking your m/b, cpu, and gpu along for the ride. Worst case, it may flame and cost you your house.
A WAY more powerful psu is not needed, merely a quality psu that provides clean power. My rule of thumb is to buy a psu that provides 25% overhead. If my system needs 500w, I will buy a 650w psu.
Mark