No, it's not a bad processor. You'll just have to work more on airflow. Get some insence and see where the smoke goes. This is kinda tough with normal cases, but you can try. Also, do you have a good case that at least appears to promote good airflow? If you don't, you will have to add more fans.
ive built 7 athlon/duron systems. 5 k6-2/3 systems. a p166.
a PPro200. trust me the hsf is clean and seated correctly. all the fans and the case are clean and free of dust