Genius idea.
For the electronically challenged could this be achieved with a relay (NO/NC dual pole)?
The funky wire wanders around the engine bay, connected at one end to power / earth and with a fuse in the circuit and connected to the control pins of a dual pole relay. With power on the relay is powering the green light.
Fire causes the funky wire insulation to melt causing a short circuit, the fuse blows meaning the relay switches and the red light comes on - would this work?