To me, radical cooling doesn't really start until the processor dissipates more than 100W. Below 100W fans and heatsinks should be able to cool them effectively. I don't think that the Athlon is limited by power dissipation/heat, it's limited by it's design - and the design can be tweaked to go faster up to a point.
To me, "limited by heat" means that you could clock the processor at 2GHz, but then the power would be impossible to dissipate using standard passive cooling (where "passive" means radiative cooling using fans and heatsinks, as opposed to active where there are heat "pumps" which remove heat from one part to redistribute it to another). Once you throw refrigeration into the design, then cost starts to rise rapidly.
Anyway, I guess I can agree that the Athlon is "inferior" to the Pentium III in terms of power dissipation, but I don't think this means that it's an inferior product. It just means that it uses more power.
To me power is another variable in the design, something that you need to take into account, but something pretty far down the list of priorities (performance typically being near the top, and schedule usually following closely behind it, with cost usually interleaved into the top three as well). As long as you don't grossly exceed your power "envelope" with a design then you, as an engineer, should be ok.
I guess to me it doesn't really matter what the power that a CPU uses (within limits) because that's a concern of the design team - not the end-user. As long as AMD says, "this part will run at 900MHz without any problems", and, say, Gateway takes this account, then what does it matter to you, the end-user, whether it uses 1W or 50W? It's been designed to work. About the only concern in my mind is the cost of electricity - and that's not that big a deal usually compared to the monitor.