The engine temp on our 1974 1800 Westie was running around the 260 mark. 
After replacing the seal on #1 exhaust this has dropped to 230 degrees. Also 
while replacing the seal the opportunity was taken to seal some potential 
leak points in the tin by replacing perished rubber seals etc. So far as 
permissible operating temps go I have an interesting  PDF file all about 
oils that says up to 400F is the maximum useful range for premium motor oils 
and 700F for synthetics!!!! It lists the following temps for the engine.

Engine Temperature Chart (F)
Upper Cylinder Wall 300 - 500
Exhaust Valve 1200 - 1500
Piston Crown 700 - 800
Hydraulic Valve Lifter 250 - 300 Crankcase 200 - 300
Top Ring 300 - 650
Exhaust Gases 500 - 1000
Combustion Chamber 3000 - 5000
Coolant Jacket 165 - 230
Connecting Rod Bearings 200 - 375
Main Bearings 200 - 350

Sure wouldn't want my engine running at 700F.
If anyone would like the PDF. I can send it if your mail can accept a 170K 
mime attachment. Just mail me direct and I'll attach it to a reply.