How much is too much?

someone told me i can ACE, then ZIP, then RAR an iso to get maximum compression. Is this damaging to the file at all, or is it okay to triple compress?
It's not damaging to the file at all, but it is damaging to the sanity of people who want to use them. There's also no guarantee that you won't end up increasing the file size. This seems counterintuitive, but it's pretty much a mathematical certainty that any given compression algorithm can never compress all possible input streams, so you might just end up adding the dictionary/header/signature overhead.
I think the source code for MAME is the only thing I've ever seen to benenfit from double compression (zip).

I zip rar files simply to serve as a wrapper (set in "store" setting), simply because I've had one too many rar archives go bad.
I'm pretty sure that the MAME source double-ZIP thing is just a hack to make it the ZIP equivalent of a solid archive. Since it's got lots of small files with substantial redundancy across those files (MAME uses a lot of macros, for instance; it's almost like its own programming language), it benefits from this.