The circuit breakers are supposed to trip before the heat gets too high, but the temperature goes up so fast in a dead short, that a breaker can't possibly stop quick enough. You could get a temporary light stringer with 10 100 watt light bulbs on it. Plug it in and see if it blows the breakers. It would be equivalent to a 1000 watt appliance. OR, plug an air compressor in and let it run a full cycle. If it holds, you are probably OK.
The only way to be absolutely sure of the condition of the insulation, would be to visually inspect the wire. Dis-coloration would be tan, brown or black. The wire may be OK with tan or brown (toasted), but black wire needs immediate attention. The trouble spots would be at tight turns and where the wire is bunched together with other wires, like where the wire goes through the top nailer plate down into the walls, especially at the panel.
Get a good flashlight and go search the attic. AND yes, check the wire where it enters the boxes. Look for coloring in the box where the wire is bent or crowded with other wires.
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