Up to 90ºC is "safe", above that, let's say 95ºC+, then it could probably damage the card's components in a long term, but don't quote me on this. I had a Radeon X800 XT back a year ago, and at that time I didn't know about custom fan speeds utilities and such, but I knew the card used to run as high as 90ºC very regularly in my 3-D games, and it never, ever produced any artifacts whatsoever, and it never gave me any problems. That beast (the X800 XT) took so much punishment, especially in hot and humid summer days, and it remained 100% functional.
So, as far as ATi cards goes, I'd say a maximum of 90ºC for the current and last generation is safe, even though it does look hot. It's alright for a GPU, but certainly not for a CPU, those are much more sensitive to high temps, at least according to what I've read.