The ignition wire on my 1966 Mustang is hot enough to melt electrical tape, is this normal?If not why?
No it is not normal - for ANY wire to run hot enough to melt electrical tape. The resister wire for the coil generally runs warmer than one might expect, but this wire is a special case - and even this wire is only warm to the touch, not anywhere near hot enough to melt electrical tape. Something is definitely drawing too way much current. You'll have to isolate the defective or shorted component or wire.
You really should identify what you mean by ignition wire. However ordinary PVC electrical tape used (say) on spark plug leads, especially near the plugs or distributor ends, will probably come off, just through the heat around the engine, if nothing else. The heat mainly softens the adhesive on the tape, and it unwinds. If you are talking about the wire from the ignition switch to the coil, it is a resistance (ballast) wire, and normally gets warm. However the same comment re the tape applies if the tape is near the ignition coil end.