If you want to flash it, you can read this http://wiki.maemo.org/Updating_the_f...MC_in_the_N900
I guess the battery is heating, not the phone. The temperature showed by QCPUfreq is the processors temperature. If your battery is getting hot, you could get a new one.'
My N900 used to be heating only while using nitdroid, but I used to have a 5800 that used to heat exactly like yours!