Assuming you are looking at it .. LED in front, Left back corner is the power supply and below it is the wireless card and gigabit chip.. both of which do run pretty hot.
They run fairly hot and this is where it is hard to estimate. How hot is too hot..
Make sure the hard disk is spun down .. you will feel a slight vibration when it is running.. if the hard disk is off.. then temperature should be very warm.. rather than burning hot.. if the backup has been running a while then yes, burning hot is what they seem to reach.
The TC does have a fan.. it turns on just before the core meltdown occurs.. for reasons only apple know.. they leave the fan off. This was reported changed in the Gen 4.. but the report I have since discovered is wrong. The same issue has existed since gen 1.. they run over hot and the fan never goes on.
I would encourage more cooling.. but unless you are prepared to alter it or do some work.. then sorry it is not bad or faulty.. just lousy design.