Why does microwave popcorn burn?
I think most of your confusion comes from the paradigm of water.  Water (under kitchen conditions) will not get any hotter than its boiling point.

Oil has no such limitation.  You microwave will heat oil well past water's boiling point and all the way up past the smoke point to the flash point of the oil.  At the flash point, the oil will actually catch fire.

If you put a bag of popcorn in a microwave on high for an extended period of time you'll see this as actually burned corn.

Also, if a significant mass resting against the paper bag gets above paper's flash point (451 degrees F) it will also catch fire.

My little sister has proven this true time after time.