Most of the heat comes from the battery due to it being discharged quickly during load. If CPU is the one that gets so hot that we can feel the heat through all that plastic, even a stock non-overclocked BUT over-volted N900 cpu is not safer by any means.

If you are unlucky, cpu will die regardless. In OP's case, although not impossible, it may not be the CPU as it does boot to a certain point. If so, ah well, unlucky. Hope it doesn't happen to mine for at least next1 year or so.