The value that RealTemp reads from Core i7 processors is called IA32_TEMPERATURE_TARGET and here's how Intel defines that:

Temperature Target.
the minimum temperature at which PROCHOT# will be asserted. The value is degree C.

Intel has said that TJMax is not a fixed value. It varies a little from one CPU to the next but they haven't confirmed how much variation is in that number. It's a number they aim for when calibrating but the actual TJMax may be higher.

My personal theory is that it can also vary from one core to the next in a CPU. That's very obvious in the 45nm Core 2 series but I think it's also true in Core i7. There's a reason why in the vast majority of Core i7 screen shots, core0 is the hottest and core3 is the coolest. If TJMax = 100C for core0 then it's likely to be closer to 105C for the average core3. If this was all just random chance then you wouldn't see the exact same pattern with almost everyone's reported temperatures.

Thermal shut down of Core 2 doesn't happen until about 125C and it's likely that Core i7 is the same. I can't imagine that Intel would set such high numbers for TJMax and thermal shut down if they thought people were going to destroy their processors. They wouldn't offer a 3 year warranty and they'd obviously lower these values if they didn't believe in the high temperature durability of their CPUs.