Did the ign wire stop the melting at the bulkhead or is it melted any under the hood ? I always try to follow the path of the current flow through the wires and trace the wire to where the melting stops. A short in the alt to ground right at the field feed wire connection like in the brush holder for the ign feed (J2 circuit) could cause that circuit to melt also but you would see it melted right up to the alt field terminal. Usually alot of resistance will cause the wire to get hot just around that point and can melt wire in the bad connection area. Like how the ballast resister get very hot since it is a resister but it only gets the ballast hot. Also to much current going through the circuit for the size of the wire can cause it. I remember when I worked at Ford their heater/AC switch would always start melting the plastic because the fan drew about 22 amps on high and would get very hot as it should have been a larger wire size for that much current flow. But I would follow the melted wire to where it stops and make sure their is no intermittant short anywhere that may have caused the wires to melt. Glad to see you found the main problem and it was the cause because as TJP said the ign (j2) circuit is the voltage sense circuit for the voltage regulator. Ron