You want thermal paste, Arctic Silver 5, specifically.
I expect you could get to 2.5 or 2.6ghz. Or further depending on how crazy you want to get.
You get some 90% at least isopropyl alcohol and clean off the part of the heatsink that contacts the processor and the top of the processor heatshield. After you clean them off good put a small dab of the compound on the CPU. About the size of a large grain of rice, or a BB. Then put a little plastic around your finger and spread it around a bit on the top of the processor.
Then take a credit card and go across it a few times in a wiping motion to smooth out the compound. The compound does not have to spread all the way to the edges, and you don't want to much or extra will squeeze out the side.
After that press the heatsink onto the processor and twist it just slightly to each side. Then screw in the heatsink and you're done.
After that I would recommend that you run prime 95, small FFT's during the day to burn the processor in, and then during the night while you are asleep have the computer turned off. Keep this up for a few weeks to help break in the thermal compound through alternating periods of burning-in and rest.