I have been curious about this, as well.
I've just upgraded my 2009 Mac Pro with a W3570 CPU. Temperature Monitor reports that my 'idle' temperature (the CPU Tdiode temp) is 42C. IStat reports the same.
Using Handbrake, Tdiode temp stabilizes at 84C (after the fans finally speed up a little). CPU cores are at 95C.
The temperatures do seem excessive, but Apple's fans don't seem to spin all that fast.
Regarding Tcase (which is 67.9C), that is Intels' upper limit for 'normal' usage. The following is an explanation by 'Intel_Karla' (presumably an Intel employee) responding to someone on the Intel Support forum.....
"Anything from the Tcase and below will be the expected temperature of the processor in normal use, anything that doesn't stress out the processor (watching movies, burning CDs, browsing the internet, creating documents, etc.) When the processor is stressed out meaning that you are running heavy processor applications that take control of the CPU or uses it at 100% the temperature will go beyond the Tcase. It can perfectly reach 90 to 95 degrees and the processor will still be OK. The cooling fan is in charge to keep that temperature there.
If the processor temperature reaches 100°C or more it will send a signal to the motherboard to shut down to prevent mayor damages and most likely it won't be possible to turn the computer back in until it cools down."
If anyone has any thoughts on this, I'd love to hear them. Applying thermal paste is not my expertise.