I cleaned up the mess and ran some splices straight through. I also ran an in-line fuse on the wire that was getting hot. The 20amp fuse burned, but 25amp has worked since.
Tom Hanson mentioned that there was a fuse upgrade for this vehicle which sounds like what I've done.
Could this be the result of a bad blower speed control unit. Any good way to test that? BTW, the blower speed works properly now that I've replaced the climate control unit.
'87 300TD Turbo