Actually I believe the lantern my buddy has is the same as mine, it is a French made item that uses a "pink lady" candle that has to be cut off before putting it in the lantern. It hangs by a chain on top, which keeps relatively cool. Heat does rise. I have used the lantern all night in a tent before with no damage to the tent, the tent roof did not get hot at all. I probably have done a full or partial night 50+ times.
I believe the candles in the lantern REI now sells are larger diameter and hang with a solid, short handle. It is very common while mountaineering to hang a stove from the ceiling of a tent and use the stove to melt snow, cook meals, etc. I have done that inside a tent as well, but that keeps your attention. It is only done where no other means is practical.