answers to both questions:
The shop manual for your compressor calls for the second stage pressure to be 500 to 580 PSI between 3000 and 4000 PSI delivery pressure. I wouldn't say that a 700 PSI safety is too low. The manual is very careful to tell you not to jack with the ASME safety valves. Next time, buy the LF safety valves and set it where you want. You have to be careful not to buy the safety valves from Grainger unless you know exactly the thread you are needing. Some of them are machined for BSP, some for a German thread, etc. Get the safety from a compressor place. You probably won't ever need to replace that one again anyway.
Cold air is denser (and therefore more easily compressed) than warm air. Oil temperature notwithstanding, you really want the feed air to your compressor to be as cold as possible all the time, both for dewpoint and compressibility. Lots of folks spend lots of money keeping their feed air as cold as they can get it with air dryers and such. Be happy and route your air intake outside. You never really want to suck your feed air from inside the building.