"is it safe to leave it in "highest""
jf,
Yes, it is safe. While some users who consistently use the "highest" setting have suggested on these boards that such use might be causing them a higher average processor temperature by a few degrees, they have otherwise reported no problem specific to that setting.
Referring to pages 14-15 and 24-25 of Apple's
May 2005 iMac Developer Note, it would appear more likely that such a higher average processor temperature is not a result of the setting itself so much as the heavier use of the processor by the users' applications.
Heavy use would leave the processor with neither a more typical gradual ramp-up in temperature, nor a lull or rest period when the fans might be expected to lower the temperature to a point at which the fans could throttle back a bit. With both those moderating advantages missing from the calculation, naturally the average would be slightly higher.
In addition, some users have reported here that their iMacs actually do go to sleep when they overheat, just as they are designed to, whether or not a hardware failure is involved. A significant percentage of those not experiencing a hardware failure have also reported that lowering the ambient temp of their environment has eliminated the sleep due to overheat circumstance.
There are routine maintenance procedures that, when performed, help to moderate operating temperatures, as does the occasional removal of dust or pet hair from the insides by those who have those extreme situations.
As to your original post, where you mention - "nearly burning their house down" - and your resulting natural concern at reading such, please keep in mind that any electrical product that actually produced such catastrophic results would be quickly banned and recalled long before this point in time and number sold.
To actually find non-biased statistics as you've requested, I don't know where you'd find better than reports coming from a non-related enterprise such as Consumer Reports, Underwriters' Laboratories, Inc. or the U.S. Government's Federal Trade Commission, as well as from consumer polling organizations such as J.D. Power, etc. Sorry I don't have first hand knowledge of what's available - as a happy long time Mac user, I've never had reason to look!