What's going on??

yes its a factory splice. It is the ammeter wire where all your power is being distributed. Here is the under dash wiring diagram for reference. Bottom rightish section shows the splice.
http://www.mymopar.com/downloads/1967/67ValiantA.jpg

If you are having trouble with your ammeter creating other problems I would look into the MAD electrical conversion. Lots of info about it on the site.