What is an acceptable power dissipation in automotive wiring?
Power is not a hazard, temperature is. So it will depend on the insulation, installation enclosure and airflow, as well as proximity to fuel vapor if any (which is why automotive fuses are sealed). I would think under 100 °C is ok, and under 70 °C is safe. Standard insulation of wires usually breaks down under repeated exposure at 130 °C.

Thermal dissipation under convective air varies from about 10 \$W/(m^2K)\$ in unenclosed still air to 100 \$W/(m^2K)\$ in forced air cooling. The area is the surface of the object in contact with air. Also keep in mind that hot air rises, so remember to orient fins (or attachment surfaces, e.g. automotive vertical vs horizontal metal chasis) appropriately.

Also, a common rule of thumb is to use 6 times wire cross section area (in \$mm^2\$) as continuous current carrying capacity (e.g. 1 \$mm^2\$ wire can continuously carry 6 A safely at 20 °C in open house wiring, and 4 A in conduit/junction box). Maximum/intermittent ratings can be almost double this. 4x cross section area is also used as maximum in transformer winding, where the traditional shellac coating had an absolute maximum limit of 120 °C.

However, also keep in mind that some parts of a car with all windows closed can easily reach 70 °C in the sun. So, do your tests and if required look for high temperature flame retardant automotive wire if appropriate, particularly for enclosed spaces likely to be heated by the sun or the engine.