How much CPU heat is too much?

I'm a software guy, not much of a hardware buff. So I've got a bit of a noob question. How hot is it ok for a CPU to get under load?

I'm using a Core 2 Duo e4400 with the stock cooler. Encoding to h264 with mencoder or playing warcraft 3 gives me temps of about 80*C. Is this likely to be hurting my hardware at all? Idling, my cpu hovers anywhere between 25*C and 45*C, which seems fine. But if I'm encoding a DVD for instance, or just gaming for an extended period, I worry that my hardware is being damaged over time.

Aside from damage, how much performance difference is there in running a CPU at a significantly hotter/cooler temperature?

Any advice? Do I need to invest in a better cooling setup?

80c is to hot for that CPU.
The 65nm generation C2 chips should max out no higher than 75c.
I would highly recomend a new CPU cooler like a Artic Cooling Freezer 7 Pro.

Thanks for the info everyone, I will look into cleaning and re-applying thermal compound (this is likely the reason for high temps since I removed and re-installed my heatsink from the cpu recently to remove dust).

If it's still too high, I guess I'll look into a new cooler. Many thanks for clearing that up for me.

gators, are you using the stock cooling gear? or better after market stuff?

That's pretty much the plan, but I only have, I guess, intermediate experience actually building PCs. Thermal paste isn't something I've played with much. Last time I removed the heatsink, I noticed that the "paste" was now a dry, caked on patch that seemed like it was going to be difficult to remove from my CPU or heatsink surface.

On to the random PC building tutorials for me, unless someone points me somewhere more helpful.

Thats pretty close to what my pc does. Im at 30C at idle and 48C-55C running cod4, bf2142, graw2 etc. Im runnng an e6600 with stock intel heatsink & fan w/ no OC. My room temp is average 72F.