isnt it supposed to keep it cool enough so the fan never reaches max rpm's?
meh, I don't think so... Default throttling without CoolBook is quite conservative to start with, even too conservative that HD vids can't be seen with it, having 700mhz and so on configured. It's not about shutting fan down, it's about picking your best throttling (as well as fix kernel_task prob for rev A) for your use. My MBA keeps fan going on all the time in summer, which is right now and I don't think anything can be done with it. Afterall, they packed so much in such a thin case, you can't ask for everything.
Why do you care so much about what settings should be used? Just put the lowest and highest at whatever voltage that works (ex : 1.2ghz 0.9v, 1.8ghz : 1v. this is revA). Set it to medium throttling (imo, high is too frequent), and optionally put temperature limit at 85c, so that whenever not in intensive use, it's throttled low for maximum saving, and when it needs it, it'll use its max power. (I never liked using B/2 as it'll even slow down casual activity.) With that setting, my revA has been running very well for quite a while.
I have both power and battery settings the same, but that's because I usually have it powered. But you may want to keep it only at lowest setting on battery to keep it run somewhat longer.
CPU temperature can vary according to the surrounding atmosphere temperature, so it doesn't make sense hearing who has low temp and who has high, until you also report what temperature the surrounding is.
Right now, I'm in a air conditioned room of something like 27c and CoolBook reports below 60c when doing light work. Also note that CoolBook and iStats report different temperature, so you should also state which one you referred.