It is my understanding that thermal paste such as Artic Silver only assists in transferring the heat from the CPU to the heatsink... but if your heat sink is already about to melt, a more efficient transfer of heat to it will not help anything. Since your temps are definitely getting up toward the dangerous range why not consider an extra case fan or perhaps an aftermarket heatsink/fan combo. Considering the age of your processor make sure whatever you buy (if anything) is meant for your socket.
Wow dude, you got a 1.2 Tbird? What did that gem set you back... a couple grand??
I'm impressed man. Who cares about those FXs and C2Ds when you can get a T-Bird. If you're interested, I have a super uber S3 Virge ISA Video Card /w optional 2MB Ram to go with that. I can only imagine... 120+ fps in FEAR. Those extremers will be creaming their pants with envy.
LOL... sorry just had to troll for a sec.
The best I ever did on an old T-Bird was to get a 1.33 to 1.6 (1.59) on a 12x multiplier. ( 133mhz FSB ( 266DDR ) * 12 )
It ran stable but ran real hot at that speed and didn't run so good after about 60c.
I still have one lying around. This thread makes me want to put it in an old mobo and give it another whirl.