You should be testing with the artifact tool that comes with ATItool, or playing a game to test for any funkiness, usually represented by artifacting, which are foreign objects on the screen. Might be little dots, or geometrical lines sprouting on incorrect vectors, you'll notice what I'm talking about if you see it. Looks nasty, no one likes it, means you've gone a bit too far(or the cards gotten too hot) and should dial the OC back alittle bit.
As to the incremental increase, realize most cards have abit of head-room in the beginning, it's safe to raise clocks more boldly in the beginning, say 20 cycles. But soon you'll push it too far and should go for 5-10 clock increases.
As I hinted at above the card will get hotter during overclocking, usually not a problem, but it can be. I have a 7600gt, and can say it sometimes reaches 75*c. anything above should be considered alittle too hot, and you should then consider better cooling, or reducing the OC abit.