If that t3400 uses the larger Dell cooler with copper heat pipes, it isn't surprising. It is a decent cooler made for 24/7 workstation use. My T3500 had Xeon W3670 6 core/12 thread CPU and stayed darn near that cool with the stock cooler.
As long as you can keep temps low, you can OC with it, yes. But I doubt the T3400 BIOS has the options needed for OC'ing. My T3500 didn't.
It does, as I changed my motherboard to an asus p5q deluxe, which I heard that overclocks pretty well