Due to its low-ish smoke point, olive oil isn't the best choice for searing meats or other single-layer, high-temperature cooking methods. However, as Chef Helen Rennie explains, that doesn't mean you can't crank up the heat when cooking a range of foods in olive oil - from caramelised onions to sauted potatoes.
Watch the full video for Rennie's in-depth explanation, but the upshot is this: When you fill a pan with a bunch of sliced onions (or other vegetable) the water content in the onions keeps the overall temperature well below olive oil's smoking point, even if you have your stove turned all the way up.
A single layer of food you're trying to sear, such as meat, won't have that same cooling-off effect, and you'll most likely end up trying to soothe an angry smoke alarm if you attempt such with olive oil. But the adage "never fry food with olive oil" simply isn't true.
Olive Oil on High Heat -- Is it Safe? [Helen Rennie]