As for running it on a privileged port, I don't know if it's unsafe or not. You could start it up separately as root by calling it from a script, like inittab, or even from the command line:
java -classpath /web/[my server]/www/chat/java adChatServer start [my port #] &
AOLServer itself doesn't run as root, even when bound to a privileged port, and perhaps the chat server could be started in a similar manner. I don't know how that's accomplished, so maybe someone else can comment on that.