When you set the control to manual, it is just that, completely manual. That means that the fan controller will strive with all its might to reach your speed goal, regardless of temperature sensor input. So yes, the card could conceivably catch fire and the fan speed wouldn't alter one iota.
Personally, I run one catalyst profile at full overclock with the fan speed as high as I can stand, which is about 50%. I idle around 55 C, and barely top 65 under load.
I have a second profile for the stock speeds, fan running just a shade over 25%. This likes to idle at 42 C and load is under 50.
When I'm away from my computer, I just put the card at a massive underclock, which drops the power consumption by half and the heat generation by at least three quarters, by my unscientific estimates. For giggles, I leave the fan up pretty high. This idles at room temp, and load is not much higher. GPU-Z reports that I'm dissipating 14.9 A on this setting, which is almost exactly half the amperage I draw at full overclock. My power bill sighs with relief.
Now, if you're worried about your card and its flammability after a long hard slog through Crysis on very high settings (which this card handles like a champ), you could always create a cooldown profile with the fan at about 60% and the clocks bottomed out. I've been able to drop the card temp from the high 70s to the low 40s in about 2 minutes on a setting like this.
Of course, if the card is already on fire, increasing the fan speed would probably only fan the flames, so I would recommend using a UL rated fire extinguisher in this scenario. Or, you could douse it with baking soda, which is non flammable and does not conduct electricity -- it's also much easier to clean up with a vacuum than fire extinguisher foam. Although the best extinguisher for a case fire is a carbon dioxide canister, as it leaves no residue.
Do note that these temp readings are from my single 4870 in an Antec 900 case with the side fan blowing lots of air directly over the card. CCC and GPU-Z agree pretty closely on the overall temps, although GPU-Z reports the MEMIO temp, as well, which is pretty much inevitably 10 C higher, unless you bottom out the memory clock.
Contrast this with the automatic profile, which sticks the fan speed at 16% and is supposed to throttle it up when the temp climbs. I once saw this card at 92 C with the fan speed still at 16%. This is when I decided that I would be manually managing my fan speeds from here on in. I am pleased to report that the stock idle temps in the 70s are loooooong gone. Under my custom profiles, I can't get the card over 70 C without turning the fan speeds down, so I estimate the chances of it catching fire or overheating to be approximately...nil. Another thing to keep in mind is that all the really temp sensitive components that will actually pop if they get too hot are all rated to 125 C. If you can reach this temp, I would suggest using that card as a camp stove, as it is clearly not a graphics card.