For 2C engines:
When the manufacturers give a HP rating at a certain RPM, it just means that the engine will produce that amount of power at that single point. It doesn't mean that is the upper limit to the RPM it can operate at, nor is it the RPM you want to prop for on the ground. Because when the model reaches flying speed, the prop allows the engine to "unload" and reach higher RPM than what it can reach static on the ground.

For most sport models, the amount of unload has to do with the engine timing, exhaust system and drag of the model. Generally most sport models will unload somewhere between 1,000 to 2,000 RPM, so the highest you would prop for would be no more than the peak HP RPM less 2,000.

It is due to this unload raising the flight RPM, you also set the needle on the rich side of peak RPM, to keep from going lean in the air.

People seem to think that the higher RPM operation is hard on the life of the engine. Perhaps, though ball bearings on the crankshaft are not the only consideration. The rod has bushings that float on a film of oil, and lugging the engine at low RPM is quite hard on the bushings. One of the reasons that CL engines typically used 22% oil or higher, while RC engines typically operate with 17-18% oil. Meanwhile most people damage the bearings by operating in dirty environments or leaving unburned fuel in the engine. And of course, crashing and not tearing down the engine to clean it, which in some circles might be called a hard landing. If you break a prop, chances are good that the engine might have ingested a bit of grit through the carb or around the front bearing.

If it is a 4C engine, the rules are different again, as you need to stay below the RPM where the valves float.