Good Info on Water and Engine Oil Temp.

Taken from Sifu Mr KN Wong's comment and edited to summary.

Oil Temp 120-130degC is way way too hot for the oil to run. That corresponds to water temp of almost 140degC.
The general guideline in the US Honda tuning circle (e.g. Hondata) is to limit water temp to a max of 120degC. 110degC for oil temp is quite the limit. Some engine oil manufacturers claims that their oil can go to 140degC but you plan to run the engine oil at 130degC and above, then be prepared to get a warped cylinder head and burnt gasket in the very near future.
Stock PGM-Fi drastically richens the AF and retard the ignition once water temp hits 100degC. At 100degC, the ignition can be retarded by as much as 5deg.

The OEM water temp is a non-linear guage. It will be stable around the middle until around 120degC after which it will move drastically. Because the aftermarket water-temp usually places the sensor in the hose between cylinder head, it will often read different temperature than the stock sensor which is attached to the cylinder head. The stock sensor tends to overread since it is also being affected by the cylinder head which is hotter than the water. The aftermarket meter tends to under-read since water would have time to cool a little bit in the rubber hose. Also, be careful of low water level because that will lead to false low temperature readings.

Summary:
1) Oil Temp (Try to limit below 120 degC).
2) Water Temp (Try to limit below 110 degC)
3) Go and get Water temp meter (critical) and Oil Temp meter (less critical) if plan to track the car.

Thanks to Mr KN Wong for his information. (FYI: He is driving a VTEC turbo)