At What Point is the Needle Damaging Records?

That's about $00.09 a day, not bad. Buy a new cartridge.

That's quite a few hours, I agree you may need a replacement. As mentioned check your set-up and try this cheap method to clean it; http://www.high-endaudio.com/Magic.html

According to Neil Young, he's seen the needle and the damage done, a little part of it in everyone. :-)

I would replace or retip it.

Ballpark is 1000 hours I believe. Your way over that average. It probably will be different with every setup. Tracking distortion happens in a lot of cases. Sometimes, it will show up more in the inner most track. It has been said if you have damaged grooves from one shape of stylus, using a different type of stylus shape may still sound ok as it will ride higher or lower that the damaged part of the grooves.

I thought a typical stylus lasts about 2000 hours and it usually outlasts the suspension. Is this not the case?