[jsr]

Cool ESC and hot motor means you're overgeared (too short a gearing). As suicideneil stated, not knowing your other gear ratios makes it hard to make a definite judgement, but most buggy/truggy diffs are about 4.3 (approx.) and spurs are usually in the 46-50T range (unless you're talking about CEN or other with 60+T spurs). But going just by the "cool ESC and hot motor", that usually means too short a gearing. Try the 16T to see if runs cooler.
Regarding 3s, I run 3s in my truggy and it runs fine. Many people will say it's not enough without having ever tried it. My truggy runs over 40mph on 3s and the ESC barely gets to the 90Fs and the motor doesn't go over 120F on a hot day. Of course, 4s would be better as you'll pull less current when geared for the same speed, but 3s is plenty to run a 1/8 truck (just make sure your batteries can sustain the current draw). I'm able to keep up with the nitros on the track on 3s, and pass them on 4s.