The 1st gen MBA had terrible thermal management, and overheating was really just a design flaw.
I agree that flash should use less CPU and the issue has been somewhat alleviated by 10.2's GPU acceleration.
Regarding handbrake, I think it is an awesomely written piece of software. Handbrake is SUPPOSED to use CPU power to 100% since video encoding is, in itself, a very CPU intensive task. Thus, more CPU usage = faster encode. To take care of the heat issue on your MBP, I would suggest 2 things:
1. Use a utility to crank up the fans instead of undervolting the cpu for handbrake (all you're doing is making the computer work almost as hard for a longer period of time).
2. Reapply thermal paste on your MBP. I'm pretty sure the 4,1 was one of the models that had terrible thermal paste application. I've heard you can get temps of around 20 degrees C lower on average.
Handbreak throttled to use only 75% of one cpu core loses so little in terms of speed and reduces thermal load and stresses by such a high amount that i would like it as an option in the software itself, im not undervolting the CPU, im throttling the handbreak application itself, the cpu remains at the same voltage. id rather lose the 3-5fps encoding speed than lose the whole system AGAIN to thermal issues, and yes, running a CPU at its thermal limits for many many hours will shorten, and eventual KILL the system, thats why there are thermal limits.
My MBP was killed by handbreak, thankfully applecare replaced it, this one ive stripped down, Arctic silvered and put metal bladed aluminium fans in instead of the shoddy plastic stock ones.
Blizzards Starcraft 2 initially burnt out CPUs and GPUs by maxing them out when on the menu screen, they acknowledged this and patched the app, Handbreak and Flash are doing exactly the same thing, saying its "by design" doesnt change the fact it will kill a cpu if used a lot (by a lot, i mean i need 18hr runs at handbreak sometimes..casual, 1hr runs probably wont be so bad in the long run).