Is this bad?

My iron looks worse than that, but it still works fine. Just make sure to clean the actual tip of the iron and make sure it stays relatively shiny. You want good heat conductivity on the tip.
 
Yeah the tip is fine. The part that looks burned is this little cover thing that screws off. It just holds the tip in place. What would be the best temperature for soldering things? I have anywhere from 350-850 degrees. About 650-700?
 
The coloring is completely normal, it's just oxidizing, this happens when the iron cools.
 
for temperature, youll probably want somewhere between 400 and 600 Fahrenheit. i run at about 790, but i do stuff fast.
 
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