Kevin,
Congratulations. You've found the trouble. I'm glad you didn't check those injectors and idle air motor I was going on about, for that was a bum steer for sure, now that I can look at a wiring diagram.

Can't really give any advice on the repair of the wire, as I've not seen how it is routed in the stick shift cars. There's a pic in my Bentley book of the reverse light switch on the top of the tranny -- and it looks very much like a job to get to it -- but you already know that.

I've fixed chafed wires for the overdrive solenoid on the automatics before, so if the wiring is similar, you'd want to replace anything that is exposed to all the snow and ice you get down there in Texas and make sure wherever it was rubbing is now secure and well insulated. But again, you didn't need me to say that.

Your engine harness, if original, is most assuredly a candidate for replacement -- they all rot. You can see that at the gray plug near the firewall if yours is starting to go. But that will have different symptoms, and there are lots of posts on this board dealing with this subject. Ignition harness is usually immune; that's the one you said is unraveling -- going to the blue labeled controller box. Probably just the wrapping is weathered.
--
Art Benstein near Baltimore