I recommend safety changes to prevent ruptured water heater and assorted leaks.
135 degree hot water.
Maybe replace TP valve if it is dripping.
Drip pan under water heater with 3/4" drain line to outside.
Expansion tank on incoming cold water line to absorb pressure build-up, and prolong life of tank and plumbing.
1) Yes you can have scalding hot water.
2) I recommend 135 degrees since that will burn the evil right out of ya. And generally kill clothes washing bacteria.http://waterheatertimer.org/How-to-adjust-water-heater-temperature.html
3) 150 is dangerous and can seriously burn skin in 1.5 seconds. Not safe around children and elderly.
4) Temperature settings on electric water heater are approximate, since thermostats are calibrated approximately, and read temperature through tank wall.
5) Also if you want to increase amount of hot water for high-consumption household, then setting tank temperature upward is one solution since more cold water is mixed with hot, so amount of hot inside tank goes further.
6) High temperature can cause TP valve to release water.
TP valve is pressure-temperature safety valve. Do NOT cap off.
Rating should be 125 psi and 180 degrees ... but all things water heater are approximate, and TP valves need replacement now and then.
It is not recommended by water heater manufactures to use 150 psi TP valve when water heater came with 125 psi. Rating shows in small print on end of TP. New TP valves sold at local hardware. Let tank cool before installing new one.
7) Higher temperature and high pressure can rupture tank.
Pressure over 80 psi shortens life of water heaters and plumbing fixtures. Put BTG100 pressure gauge on water heater drain valve to check pressure.
8) You need a drip pan with 3/4" drain line to outdoors, or to drain vent line, to prevent flood caused by ruptured water heater.
Turn water heater off when going on vacation.
Inspect water heater each 6 months.
Drip pan available at local home center or hardware:http://waterheatertimer.org/9-ways-to-save-with-water-heater.html#drip
9) Heated water expands and puts pressure on tank and pipes.
Water does not compress... so when water gets hotter it expands against tank wall and against pipes.
Especially in closed system (check valve present) when system is without expansion tank.
Expansion tank is installed on incoming cold water line.http://waterheatertimer.org/9-ways-to-save-with-water-heater.html#expansion