Best E7200 cooling option, other questions

First time overclocker here. I own an Core 2 Duo E7200 (socket 775 LGA), and considering its rapidly aging performance I've taken to overclocking it slowly. Currently on the stock HSF I've got 3.16GHz (from 2.53ghz) and am running a little warm, 44-50c core 1 and 40-45c core 2 on idle , and up the low to mid 60's on full load (all from RealTemp), so I'm looking into a better HSF before I think of pushing it any higher.

I'm considering http://www.newegg.com/Product/Product.aspx?Item=N82E16835186134, though I'm open to alternatives if there's something better for a similar price range.

So I have a few questions here:

1) Is this a good cooling option, price to performance wise? I'm willing to potentially spend a little more (no more than $60~) if I can get more OC potential out of it. Keep in mind I'm not working with a whole lot of space (tiny gigabyte motherboard, average size case), though I keep the side off my case so there's no concern of it jutting into the side.

2) What, ideally, can I hope to achieve safely with this CPU and HSF (or with this CPU and your suggested HSF). People with experience to the E7200 specifically are of course preferred, but anyone can weigh in on that one obviously.

3) The description page says it has "pre-applied thermal paste". Does this mean I don't need to purchase thermal paste separately? Or rather, is "pre-applied" reliable, in this instance?

4) I'm completely new to overclocking, any tips I might have missed as a first timer?

Thanks in advance.

System specs to see if power supply is relevant:

Gigabyte Model EP43-DS3L
Windows 7 Professional 64bit
Core 2 Duo E7200
4GB DDR2
Nvidia 9800GTX+
EarthWatts 650W

http://www.overclockers.com/forums/showthread.php?t=515316
^^^read this^^^

Have you looked into the closed loop water cooling? If not water, the Cooler master hyper 212+ is one of the best budget you can get, and that pre applied is pretty good, if you get more thermal paste, stay away from the real cheap white stuff