Yes I did replace the cord cap, and no, the breaker didn't trip...I would assume that is because, as TG pointed out, it was on the nuetral side. The conductors were actually copper. I think what was happening is that, if you notice, the receptacle is very close to the right side of the box. I think it had started arcing from teh nuetral to the box, and it just generated heat.
I'll tell you the scary part though...as I said, this was a relative of mine. There is no denying that this really could have started a fire. I mean, when I cut the paneling a little to install a new cut-in box, it just crumbled...it was that burnt. Anyway, the scary part is that we are all going on vacation next week. I really think that they could have came home from vacation and found that they had no home.