Just to answer the question about is it possible to actually damage the engine? Yes, but you usually have to work at it.

I've seen engines fail due to too high RPMs a few times. Usually the failure is either a broken con rod, exploded bearing, or broken crankshaft. In all of these cases, enough metal fragments go through the engine that it usually becomes a paperweight, though I do know of a Megatech .15 that blew a rear bearing and lived to tell about it. (It's still running, though the piston has some visible scoreing from the fragments).

I've also seen engines run for very short periods of time with NO prop, or a dramatically shortened prop with out damaging the engine. (after a mid-air that damaged the prop). Shaft runs are pretty distinctive sounding, that's for sure. On ABC engines, if it doesn't go on too long, the engine often lives to fight another day (or round).

However, extended running at too high an RPM will wear out the internal parts sooner than they should. Mostly, the conrod bushings and piston/liner.

If you're going to run it at high RPM, be sure to keep it on the rich side, the extra fuel and oil will really make a huge difference in the lifespan of your engine.