how far should I overclock?

"What speed would you recommend"

Two variables are involved: speed and stability.  The higher you go past the rated speed, the more likely your system will develop instabilities.  The trade off is completely up to you.  If you're overclocking for games, this is hardly a critical application (in the big scheme of things) so go ahead.  Don't be suprised if it locks up after a while.  If you're overclocking because you want your rendering program to finish in 25 hours instead of 30, invest in a faster CPU because it'll probably crash after 24.5 hours and you'll just have to start again.

Be aware that even a lightly overclocked CPU puts out a heck of a lot more heat than at the already hot normal operating speed.  DO NOT use the freebie/cheapie heatsink and fan that came with the system or motherboard.  Invest in a quality model that will set you back at least 40$US.  Check the reviews at http://www.sharkyextreme.com/ or your favorite overclocker's website for heatsink model comparisions.

They are right. Overclocking is maybe a fun hobby, but will probably reduce reliability. Check things out carefully for your particular motherboard and processor. Some are easier to do than others. Try a few web sites that deal with this, and educate yourself. Be prepared to replace fried components. First educate yourself on the subject.
http://www.overclockers.com/
Browse some of their "cool links"
Search some of the big search engines for "overclock"

maybe
http://www.extremetech.com/

There are free apps at places like tucows.com that will monitor temperatures if your motherboard supports them.

Some people make a hobby out of over clocking. I read one article where a person modified a small personal refrigerator so he could mount all his computer hardware in it for over clocking purposes. I also have read articles about companies that now make liquid cooling devices to secure over the heat sensitive chips to keep them cool for the purpose of over clocking.

From a professional standpoint....

NEVER OVERCLOCK. The initial results might be impressive at first, but when the reliability of the system starts to fall short or if the system stops working altogether it may just end up costing you more money then it would have to build a new faster system.

Just my opinion.

I have to agree with the xperts :-)

I will put it back to 866 straight away.

Although it only registers a few degrees hotter (under stress) when I overclock it to 1007 MHZ, as compared to 866 MHz

Don't be too stressed over a few degrees; the CPU will not overheat until 75 degrees C or more.  Overclocking can be cool when playing games for the extra boost.  As for the stability, this is a temporary phenomenon.  If it is unstable at overclocked speeds, this does not damage it at all.  Of course, if it is unusably unstable, there is no point, but locking up when running too fast is just because the data being manipulated does not arrive at the proper places inside the chip at coordinated times.  A simple reboot is all that's needed to clear this up.

A few degrees increase is nothing - 20 degrees is cause for concern.  Don't be afraid of shadows.

I'm getting mixed responses here

No, you're not getting mixed signals, just no one knows what you do with this computer so all the bases are covered.

The two bases are:  If this computer is used for real work, leave it at the rated speed for maximum reliability.  If the computer is for fun and games, overclock as much as you want but be aware that it will lock up at random times.  As long as it is properly cooled, there is no danger of any damage.  Temperature raising a few degrees is no big deal.

You can solve the controversy by telling where and for what you use this computer.  Fit to one of the two cases given above.