I work in the web development field. Since the beginning of February I've been working with a company as a contractor. This company puts all incoming developers on a contract basis for the first month to three months. They use this as a trial period to make sure everything is a good fit.

A few days ago my employer meets with me and tells me that an offer is forthcoming. I should be expecting the offer March 1st.

I enjoy working at this company, and I feel it's a very good fit. I have a record of earning more at other companies than my current contractor rate. Is it okay to negotiate for higher salary at the time the offer is produced? My fear in starting any negotiation is that the company might rescind their offer. I've never made a transition from contract to full time, and I would like to know if negotiating is acceptable and appropriate in this case?

This is a hard call. You have to gauge how much they like you as to whether you can ask for more.

But you also have to remember that salary is not the total package. As an independent contractor you are responsible for paying your own insurance, taxes etc. There may be other benefits like profit sharing, 401(k) and more that increase the total package. So before you try to negotiate, make sure you understand the value of the total package.

Any time if you have proof of your ability to try, but again, you risk them withdrawing the offer.
But that is a risk you have to decide if you want to take.

If you made more money before with other companies, why did you take a job paying less ?

Of course it's OK, and of course they might change their mind, so you use all your skills and negotiation, and one is to find out the financials of the company as best you can. Have you talked to anyone else who has been hired in the last few months, investigated revenues/venture capital/prospects and plan for the next few years? I would listen to the offer, ask about all the benefits and stock offerings and so on, maybe a copy of their business plan and most recent balance sheet, and say you are extremely happy working there and (not but) will take the info home overnight and go over it.
If they work pretty much month to month without a big future looming, skip all that and be glad for the offer, but if it's too low, say you are worth more. Don't go into past salaries or cost of living too much, more about your skills and worth.