Since the charger is only supposed to supply 5 volts at 12 watts which is about 2.2 amperes of current, that much damage from that amount of current is not possible unless the charger shorted internally. If an internal short happened then you would see significant damage on the sides of the charger. If you look closely at the wall plug portion you will notice that one of the prongs is etched indicating significant current, more than the charger would supply. My suspicion is that the pug for the iPad contacted the plugs for the wall causing the short. The smoke damage and the arcing occur in the same spot as if the end of the charging cable contacted the prongs.
That much damage on the iPad plug would severely damage the iPad possibly to the point of non-functioning. You should be able to see damage on the port on the iPad. Absence of any damage on the iPad there has to be another point of contact for the short, thus the contacting of the cable end against the plug pins.
If there is no damage in the port for the iPad a new charger from Apple and you will probably be as good as new.
I doubt the CPSC would be interested in damage that was inflicted by misuse of a device which is how it appears to me, especially with the damage on the power prongs.
cwm9
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