Anything over 80C is too high for comfort. Even if it seems to work ok, you're still shortening the life of your card by running at those temps. I would first take off the cooler, and completely clean out all the thermal paste - sometimes they put way too much and it only makes things worse. Then apply a small amount of AS5 and reseat the cooler. This alone may drop you temps by ~5 degrees, so it's worth a shot. Also, with programs like Ati Tool or Ati Tray Tools you can manually adjust the fan speen on the cooler. Setting a higher fan speed will also bring down the temps, at the cost of increased noise.
If all else fails, get an aftermarket cooler like a zalman vf700 or a Arctic Silencer. I'm using a zalman on my 16 pipe gto OC'd beyond XT PE speeds, and the temps go to ~60C under load.