Should I have all the aluminum wiring removed from my home or just the damaged portion?
This doesn't sound like a technical question.  You didn't maintain the AL wiring properly... it had a problem... should you replace it?   The real question is do you trust yourself to maintain it going forward?
Same exact thing probably would've happened with copper.
I do systems rollouts within enterprises, where you get employees to switch to a new business system. People don't like change. New systems don't fit old ways.  It was much worse in the 60s-70s when the first automation was happening and many failed, for many reasons. In most cases using Sperry vs Burroughs vs IBM made no difference - employees were uncooperative, management didn't listen, etc. If a company bought IBM, then  management presumed the computer was OK and confronted their internal problems. But if they bought Burroughs, they'd take the easy out of blaming Burroughs.  So if you were responsible for picking vendor, you picked IBM.
That's called a &quot;Halo Effect&quot;.
Same with copper wiring.  The same exact problem happens in 2 different junction boxes.  If it's copper wire, &quot;it was a mistorqued screw&quot;.  But if it's aluminum, &quot;OMG it's the aluminum wire&quot; and that's as far as people's brains go.
So that's most likely what happened there, if it was copper, it still would've failed owing to faulty workmanship, and it wouldn't even occur to you to rewire your whole house because if it lol.  And by the way, the wire didn't burn up, the wire termination (end) did.
In reality, it's copper lugs.  They do not play well with aluminum wire.  Aluminum lugs work well with both, which is why they are widely used: Tear apart an Alumiconn; it's made of aluminum. Ditto a Mac Block, ground bar, and many panel lugs.
But aluminum wire is not better than copper; you can still screw it up in all the usual ways.  We just have to add &quot;failing to use Al-rated terminations&quot; to the mix.
My Rx for aluminum wire
First, you fit arc-fault protection (usually at the circuit breaker). That will catch many/most of the kinds of failure we worry about with Al wire.
Then, you visit every connection point and make sure it has terminations rated for Al wire.  That means (in the US) CO-ALR receps, Alumiconns, MAC Blocks connectors etc.  (and I dislike purple wire nuts because it's not that simple; you do need to physically separate Al and Cu wires, and there are lots of pix of melted and charred purple wire nuts.) And in cases where you must attach to equipment not available with CO-ALR termination, you pigtail to copper for the last 6 inches.