Running at 100% CPU is not necessarily bad. On the other hand, it can be quite a significant problem. Basically, it depends on what you're running on and how you're running it. It would be best to view a couple of scenarios to show this:
- On a dedicated gaming machine, with only the game open
In this case, it is a very good idea to use as much as possible of the CPU for your game. It'll end up running faster, and it won't be stealing CPU from anything that needs it (the system processes will still get what they need, don't worry about that).
- On a computer also being used for word, the internet, a couple of Youtube videos (like in that Chrome ad), etc.
In this case, using all of the CPU for your game will cause the user to eject the disk, snap it in two (ignoring the fact that they could get a refund), chuck it in a fire, and then flame your forums. Joking aside, it is never a good idea to use all of the CPU if there's a likelihood that the user will be doing something else with their computer at the same time.
An important thing to consider as well is whether the target has a single or a multi-core computer. With a single-core computer, your game could take up all of the processing power, causing everything else to grind to a halt. On the other hand, with a multi-core computer, unless you're making full use of both cores, it should cause no problem - you'll be taking up one core, but there will be more for the other applications.
At the end of the day, it depends on these sort of issues as to whether using 99% of the CPU time is a good or a bad thing. Intrinsically, it isn't, but there can be cases where it is. Just remember that (on a computer, anyway - games consoles are a different species), it is often up to the machine to virtually allocate CPU time to different applications.