do me a favor and pop out that ram simm and see if the cpu still gets hot.

also you need to get a legitimate temperature from an IR temp gun or even a thermometer touched to the top. 

normally the LC-III cpu does not get that warm even when running @33 mhz Re-clocked.

120F probably at the most.

- sometimes in the washing process water can still pool under i/c's did you dry the board with a compressor before you tried it?

your cap job looks to be ok though.