Regardless of ambient temps, these Sandy Bridge CPUs do not let themselves heat up past their "junction temperature (Tj)" (100°C) or a little less.
So when you see 97°C as in the OP, there's a good chance the CPU is already throttling itself (starting with clock speed, then shutting down cores) to keep under 100°C.
I was doing the test in my office at the house which I keep at 70º fahrenheit.
If the Air was throttling it was minimal, because I continued using it during the encode and watched the CPU's and temps the whole time to see what it would do.
I had all my regular apps open and it never showed any signs of trouble.
The encode took a while but it was a steady 55 to 60 fps, nothing in comparison to doing it on my Mac Pro but certainly not bad for a MacBook Air.
If I wanted to test again after the thermal paste has settled out how long should I wait?