With no load on the wiper, then the pot is rated to handle 316mA. You need to be careful exceeding this even when the pot is actually dissipating less total power because the current is going through only a portion of the winding before exiting via the wiper. You have two issues at play -- total heat that the package as a whole can handle and localized heat within the part of the windings that are actually carrying current.Your exactly dead on except I'm using a 50 ohm 5 watt pot to heat a loads that vary from 16-72 ohms. to dissipate dew from my telescope and different eyepieces. So why is this amp. meter not passing current, I'm bewildered that such a simple circuit is drawing up to 4+ amps in the pot before it smokes? Thanks for seeing the simplicity of the circuit.
At 12V your total resistance (load plus the portion of the pot winding between tap and supply) should probably be kept above about 35Ω. When your load is down in the 16Ω, then turning the pot more than about 60% of the way toward the wiper is probably starting to stress the windings.