Where do I start? Replace wring and hope it was just a short? Thoughts?? She was smoking like a S.O.B! 
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Oh yeah, and as an afterthought, you should add a fusible link (16 ga) or fuse (50 amp or so) on this wire to make sure this doesn't happen again!
Next time could be a fire and you may not be so lucky.
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No. The insulation is evenly burned off from the alternator terminal to the wire (spliced into the harness) coming off the battery pos. post. The bulkhead connector is not burned nor is the wiring to the ammeter under the dash. It's just very odd. The plastic on the alt batt. connection that keeps the post from grounding out on the housing is missing. It looks like this might have caused the path to ground but it could have melted away due to the heat.
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No. The insulation is evenly burned off from the alternator terminal to the wire (spliced into the harness) coming off the battery pos. post. The bulkhead connector is not burned nor is the wiring to the ammeter under the dash. It's just very odd. The plastic on the alt batt. connection that keeps the post from grounding out on the housing is missing. It looks like this might have caused the path to ground but it could have melted away due to the heat.
You can then pull a new wire from the alternator stud but I would terminate it on the starter relay with a loop connector instead of the splicing into the battery cable. Use a 8ga or better wire with a 16ga fusible link. You could go with a fuse but fusible links are better on charging circuits as they will "blow" much slower than a standard fuse if there is a consistent (as opposed to momentary spike) problem i.e. short to ground. This mod is commonly known here as the 'MAD electrical upgrade'.
This is what I did...8ga from the alt output with a 6" piece of 14ga fusible link goes to the pos. stud on the starter relay...been like this for years,coupled w/relays for the headlights takes a big load off the bulkhead.These are easy and inexpensive mods any driver Mopar should get I've taken it all out and am going back with reproduction OEM harnesses from Year One and will be done with it. She has the factory fusible link but like you said, it was completely bypassed and wasn't worth a crap in this scenario. If it didn't' fry so much of my wiring I'd just do the MAD upgrade as this sounds like the way to go. Unfortunately in this case ALL the wiring was damaged in a way that it all just needs to be replaced. 
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.make sure the original alt output wire in the harness is disconnected from the alt.
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It is not hard to run a heavier wire through the bulk head. just drill out the original location and run a longer wire through following the original routing. It eliminates the troubles some bulkhead connection and is not really noticeable.
It's Nacho's parallel bypass. I bought a bunch of spools of stranded wire of different gauges/different colors of insulation then set the harness (65 dart) on the floor & made a new harness next to it starting from scratch one wire at a time. I'd add/solder in 1 wire/circuit then take that wire out of the old harness till the new one took shape & the old one dissappeared 1 wire at a time. NAPA brass terminals 725145 female 725147 male. this gave me the same shape on the harness routing & would for sure be cheaper than a Y1 item. Also I went 1 gauge larger (smaller #) on most of the wires (some dont need to be larger). Take pics & LABEL where each wire goes. Just me I like the ammeter & yes all connections need to be cleaned/checked & I relay all addons to the alt side rather than to the batt & I strive to keep the ammeter needle close to 12 o'clock. This is what works for me
