Can you overoptimize?

Yes, you can.

To avoid this, the best practice is to write the highest quality post that is the most comprehensive for that keyword. A high quality post is not going to repetitively use the words in the list for the sake of SEO'ing the article. Please read on...to the end...on this important topic.

The makeup of the Content Optimizer is designed to keep users from overoptimizing. You only need to use a word from the list once for it to be counted in your grade. For example, if you are writing a post about "things to do in Houston", then you would want to include everything on the list that is a thing to do in Houston. There is no benefit to your grade in the Content Optimizer from using a word from the list more than one time.

When using the Content Optimizer, the best practice is to get an A++ by adding content around the most relevant words in the list that are related to your post. You will naturally also use that word from the list. If you are creating an outline using the Theme, Variations, and LSI tags in your Report, you will be doing this.

The words in the list are in priority order. If you can use all of the words, wonderful. If you cannot do this naturally and meaningfully, then do not. In that case, focusing on the top 40-60 is a good strategy to cover the most important topics, and get your grade to an A++.

The best practice is that your goal is to publish the highest quality and most comprehensive post out there. This means naturally-written value-added content that is the last stop for a Google searcher (so they don't ping back from your post to go somewhere else). This means that you add something new and fresh, like your personal experience, your opinion, or your ideas. It is not a mere rehasing of other material already out there. You are looking to "rock it" with your post for the long term!