What a waste of half a day, but I finally solved it. The verdict is in, I am a certified idiot.
Just to eliminate the solenoid from the list of possibilities I replaced it with one that was sitting around the garage and I knew to be in working order. Unfortunately it was a 6V system solenoid and I didn't realize it. So then when I found the faulty wire and replaced it, it didn't solve the problem and I moved on to other sources.
Only after eliminating everything else from the list of possible causes several times did I take a second look at the solenoid. Put the old solenoid in, and what do you know it started right up.
Glad to have found the problem, and lucky that the faulty wire is one of the shortest and easily accessible, but not looking forward to surgery on the wiring harness.
Anyway, I'm guessing that when the negative lead of the timing light fell off the engine block, it shifted the positive lead so that it was connected to the positive battery cable but also touching the solenoid ground wire. The smaller gauge ground wire burned up quickly.
I think I'll just go through the hardship of connecting the positive timing light lead to the battery post next time
