If you think about it, virtually ALL the protein you eat will eventually be burned as energy. Say you are on a super-duper gain program which allows you to pack on 12lb of muscle in a year - that's a pound (440g) a month, or 14g a day. Now muscle tissue is about 1/4 protein and 3/4 water, so your body is only retaining a few grams of protein a day, even when you are gaining muscle.
The reason we need to eat protein is that the protien in our bodies is in constant turnover - cells die, new ones are grown & damage is repaired. Whenever protein is turned over & processed, a small percentage of it degrades & ends up being used as fuel.
An average sedentary person loses about a quarter of a gram of protein per pound of metabolically active (lean) tissue in the body - so at a lbm of 160lb, you need a minimum of 40g of protein a day. Anything above this will effectively be degraded into glucose & urea. Since the average western diet provides around twice as much protein as this, protein deficiency is not a common problem.
Us loons who go lifting weights need more protein - because working out causes cellular damage, and increases the general turnover of protein in the muscles. Some of the training that we do is so intense that free-amino acids end up getting smoked as fuel as the muscle desperatley tries to cope with the demands placed on it.
And although we may only retain a few grams of protein a day when we grow, that growth is always going to be easier if the raw materials are in plentiful supply.
In my experience, a bodybuilder working out regularly needs something like a gram of protein per pound of lean body mass - not per pound of gross mass, as adipose tissue uses very little protein. The actual amount depends on the individuals training style & personal biochemistry.
I'm about 195lb & 15% fat, which makes me about 165lb lean. I find if my protein intake is in the 150-175g per day range, I gain nicely. Less than this & I don't recover well. If I go over 200g a day for any length of time, my joints get sore - probably uric acid.
Emma is right, extra protein will not convert directly to fat. However, it all eventually gets degraded to fuel, and that surplus fuel may replace fat that would be burned in its place. Once you have consumed enough protein to meet your body's needs, all you are doing is increasing the nitrogen content of your piss.
The advantages of whey are that it metabolises very quickly & has a high biological value, so if you neck 50g of whey protein straight after your workout (when the need is greatest), it will be in your body in 90mins, whereas if you ate half a pound of steak instead, it would take about 4 hours before that protein is useable.
The other advantage of whey protein is that it tends to be quite pure - about 80% protein. I remember about 25 years ago buying Wieders Milk & Egg protein, and being most annoyed to discover it was basically skim milk powder & dried egg powder, which I could have made up myself for a quarter of the price. Now I buy whey for £14 (about $28) per 5lb tub, and the protien actually works out cheaper per gram than the protein in skim milk powder from the supermarket