Won't be an overheating issue, they usually just get slower when hot (Pretending to be a flat battery), or shut down completely & bleep if they're too hot.
The damage in the pic suggests a shorted power component, usually a FET or sometimes the BEC regulators can die just as spectacularly (Usually as a result of overloading, usually from using a high torque servo). BUT, assuming yours is the same as mine, like I said, there aren't any power components in the immediate viscinity to the scorching, just motor wiring, so my guess is (Being a Chinese assembly) that there was a poor solder joint let go or an errant ball of solder rolling about that has shorted it out, ie it was a "duff" ESC
