Existing issues

I'm putting a single recessed light at the bottom of the stairs and I plan to re-use the 3-way switch at the top of the stairs so I don't have to pull new wire. I pulled out the insulation below the wire drop to see where the wires went, and was quite disturbed to find burned insulation paper.
There is only one original circuit in the basement, and I haven't touched it yet as my new fixtures are on new circuits from the panel.


Looking up into the space, there is matching residue on the wire insulation, but it's strange that it doesn't appear melted at all. We've been in the house for 2 years and never smelled anything, or had issues with this circuit.

My only assumption is that during the original wiring, they mis-connected one of the three-way leads and tried to operate the circuit. This theoretically should result in a dead short, so I'm suprised that the breaker stayed on long enough to result in this kind of artifact.

For now, I think I'm going to look at other parts of this circuit and see if there are any additional examples of this kind of problem. If not, I may pull this section of wire out and replace it, just to err on the side of caution. I wonder what the individual conductor insulation looks like inside??