Seems pretty ok for me, you will not get all shots sharp even with IS but just shoot more it will be fine, since there will be some winners and some losers.
Tripod usage is almost a no no if you're shooting insect macro based on experience - you set it up and Mr Butterfly decides you're not attractive enough for him so he flies away. No point, really. Of course for less active things like spiders not such a problem, still life don't need to say;
70-300 is not a bad lens for the price, but it's not the sharpest lens that you can use to shoot macros out there, the macro range is also only between 200-300, which can be a boon or a bane depending on what you're shooting, as mentioned by others a little soft.
With regards to sharpness - it depends on how picky you want to be. Personally I think it's more than sufficient for my uses, though when I zoom in a little I can perceive why people tend to shy away from it.
Also note that the macro capability is 2:1 maximum, nothing like true macro lens which gives 1:1. So for larger things like butterflies not so much of a problem, for really small insects or objects will be a problem, unless you're fine with cropping.
This is one of my favourite shots I've gotten with this lens (which I borrowed from a kind soul);
http://www.flickr.com/photos/night86mare/517884604/
All the macros in my flickr are using the 70-300 as well.