So with all this talk about foreigners here illegally, I want tomake sure I am here legally! I have a "Residence Permit for Foreigner in the People's Republic of China" in my Passport. The permit gives the purpose of residence as "Work" (in Chinese). It was issued in Beijing, and I currently live and work in Kunming. Am I legal and safe?

You're probably safe, but make sure they pay taxes for you. Plus you need that information if you ever want to directly exchange your RMB into a foreign currency . Otherwise I believe it's limited to something like $500 USD per day for foreigners, and $2,000 a day(yearly cap of $50,000) for citizens.