I own an i7 7700k (without OC and Water Cooler 120mm) a 1080 8gb and 32gb ram
Even with OC my processor gets too hot getting 70 °-100 °
I sometimes do workloads (compiling large programs) that leave my cpu usage at 100% for several minutes (up to half an hour, though rarely) and in that usage temperature _should_ remain within spec. (My 3800X on the stock air cooler doesn't go over 80ish C but it does reduce boost from ~4.4-4.7 GHz under ligher loads to 3.9-4.0 GHz sustained 100% load from a 3.9 GHz base clock)
If your temperatures are out of spec I would investigate issues with your cooling including changing the thermal paste and purging the water loop. (There are several AIO/Liquids that have issues that will result in clogging of the waterblock or radiator, remeber to add a biocide to the water)
Here is an example on how to purge a water loop:
btw: your cpu getting hotter in cp77 then in w3 actually means that cp77 can utilize your cpu better and therefore is better optimized for your hardware. well, that and that it simply requires more processing power. in any case, having a game fully utilizing multi core cpu is a rather difficult task and something the game engines struggled with for a long time.
Using more of something doesn't mean it is using it better. If you think of the game engine as a combustion engine using more fuel doesn't mean it produces more horsepower and efficiency is also a key factor. If two engines produce the same power output but one uses less fuel then that one is more efficient and "uses fuel better".