Thanks for the responses guys.
It doesn't heat up when its in the "on" position. Only when the motor is running. I swapped out another used ignition from the junk yard and it does the same thing. Makes me think its further down the line. I pulled the electrical diagram, but im not electrical magician. The circuit is the yellow highlighted area.
New ignition. It overheating wire is the bottom one thats all black.
I went on to trace it back into the "fusible link" box that is on the inside fender. I didn't get a photo, but it looks like this:
This wire also gets warm and the color on it looks like its seen some heat, but nowhere near melting like the connector under the dash.
Now my weird brain thought my batteries ground was bad, so i started cleaning contacts, but the same problem still persists.
What do the BAWC pros suggest?