While we will never know exactly what or how this coin became damaged, it does not look like any coin struck thru cloth or fabric that I have ever seen. As the rims are intact my best guess that someone with lots of free time poured/placed a small amount of some type of corrosive liquid or substance that just filled the coin to the rim and did not spill over onto the rim. Left that side for a period of time, removed the foreign substance, flipped it over and repeated the process on the opposite side.
If the time the coin was exposed to whatever was used was short enough and because the coin was likely lying flat not much material was removed from the coin thus explaining why the coin does not weigh light. But that would explain why you see the wicking or as you call it the flame look too much of the surface, the acid was eating the surface and the metal was moved around but not lost completely.
The above is just a guess on my part, but it makes sense to me and could explain why the coin looks like this. People do lots of weird things to coins for no reason that is apparent or makes sense to anyone but themselves.