Under what conditions does the 701930 melt the outer-case?

The user manual confirms the following:
“Heat generated by an input current whose frequency is 1kHz or higher is mainly due to self-heating of the sensor head; in this case, the protection function is not activated. Therefore, be careful of burns, short circuits, and other accidents or sensor damage the the like caused by the temperature increase.”

See "Derating According to Frequency" chart and observe this chart and the recommendation above.