Yes, they do get that hot. I have an old
B2400 and a newer 4330, both HST and both with FEL's but not backhoes. When the FEL is worked hard the valve block is too hot to touch for more than a second or two. And your backhoe probably heats up the oil more than my FEL and HST together because backhoes seem to spend a large percentage of the working time against the stops; it with the pressure relief valves flowing, which really heats up the oil.
But the proper hydraulic oil will maintain sufficient viscosity to keep rubbing surfaces apart even at 100 deg C, which is whole lot hotter than it gets in the tractor. Likewise, proper hydraulic oil does not oxidize very rapidly at temperatures below 100 deg C, so the temperatures you are feeling do not significantly shorten the oil's life.
There are charts somewhere on the Internet that show how long you can touch different surfaces at various temperatures; I vaguely recall that 150 deg F metal is too hot to touch for more than a second or two. And the hot water from most hot water heaters is 140 deg F or less. Run a metal pan full of hot water from a tap near the hot water heater and feel the pan; I suspect it will be hotter than your hydraulic valve.
Better yet, buy an inexpensive infrared thermometer for an accurate reading of the valve body.