Ok, I'm going to try to explain this as best I can.
For a while I've been playing with the different 2.2 roms out there. The other day my droid seemed to be acting oddly. It would download apps from the market, but get stuck installing. (this was on Kangerade) It just would never complete. I rebooted the phone and still nothing. I went into the market app and cleared the data and cache and still nothing.
I decided I'd try flashing a new rom, figuring perhaps it was a bug. So I flashed Bugless Beast 0.2.1. I did wipe data/cache. It booted up ok at first, but while syncing it seemed to get very hot. It shut off and rebooted itself. It stayed warm and I decided to download some apps. Still they would not install. I tried then to install them from my Titanium backup. I flashed the new busybox and it would not install them from there either.
I got frustrated and went to Cyanogen 5.0.8 It works just fine. Everything works and downloads correctly. So the next day I decided to try another froyo rom. I tried 3 different ones and all of them the phone seemed to be excessively warm and apps in market would again get stuck on installing. One of the roms even got random force closes and reboots.
Am I missing something? I went back to cyanogen 5.0.8 and it works fine again.
Edit: the heat seems to come from above the battery beside the camera. Not from the battery itself. Everything had been working just a day before this started. And I've never had issues before.