How could this go, if it is indeed the problem?
I cannot say why it blew but it definitely looks like it has a problem.
Perhaps when the heating coils went they touched the case, drew too much current and this was the weakest device in the circuit so it was weakened perhaps its contacts pitted. Then when you installed the new heater it blew as it now had some resistance due to the pitting. This is just a guess.
So, a brand new replacement heater can blow a fuse?
I would check the new heater with a meter just to be sure that you have not received a defective part.
Or was it just blown when the heater went?
But if that's so, then why did the fuse arc and smell after turning on the heater?
Again cannot say.
They do seem to like to confuse things as it is called a resettable fuse (page 12 in the manual) when in actuality I would say it is a resettable thermostat.
Sorry for not getting back to you earlier but got stuck at the lake due to a snow storm.
If you do not own a meter, I would suggest you purchase a one. You can get a decent digital multimeter for under $20.00. You do not need fancy though it is nice if the leads are a couple feet long.
If it saves ordering one unnecessary part it has paid for itself and you end up owning a useful tool.
Most places will not let you return electrical parts so if you order it, you own it.
A couple things to watch when measuring ohms and continuity
1. Always remove power from the machine otherwise you could blow your meter.
2. Always disconnect at least one side of any device you are checking. This eliminates the possibility of measuring an alternate/parallel circuit path.
3. When checking for closed contacts and continuity use the lowest scale (Usually 200 ohms). Then try higher scales. This scale is 0 to 200 ohms so if the device you are measuring is 300 ohms this scale would show an open circuit which it is not, you are just measuring outside the scale's dynamic range.
There is a good STICKY at the start of this forum about it's use.