In a word, no, you're not damaging the LED. So long as it isn't overheating (your heat sinking sounds adequate). As mentioned, dynamos operate as constant current devices, meaning they reach a saturation current at some minimum speed. I've run the XFDD on my testing jig and it saturates at around 600 mA. That means that even on a very rapid downhill descent, you can't blow the LED because the hub just won't put out anymore current (I've measured up to 50 km/h and at that point the current has plateaued).

Dynamo hubs cause confusion because their output voltage is determined by the load. The open circuit voltage of a hub can get very high (over 100V say some, although I've never measured more than 30V on my test setup - some modern hubs have their voltage outputs limited by an internal zener diode). But when the load is an LED the output voltage will the the forward voltage of the LED, no matter what the speed is. With a fixed load like the LED, current is a function of speed, not voltage.

In my experience, you do not need to take any extra precautions to protect the LED other than heat sinking. A constant current LED driver seems intuitively like a good idea, but it adds complexity and isn't necessary. The rectified output of the hub dynamo is sufficient.

(I say this after spending months designing a driver circuit that regulated LED current and realizing my efforts were unnecessary!)

Yes, adding this in series should be fine. The front and rear LED will get the same current, so you just need to make sure that both LEDs have a maximum current rating of at least 600 mA.

Disclaimer: I don't like to state anything with too much authority. Most of what I know comes from the wise folks in the bicycle lighting forums at candlepowerforums.