The unique guitar sound in the song was achieved by using a small Crate practice amp.
Citation? I'm nearly positive Morello used the marshall 2205 and peavey cabinet from the beginning, along with his custom Arm the Homeless guitar. His effects have been more or less the same since the beginning too. He may have done a few overdubs with other amps/guitars, but his main gear was more than decent.
A couple famous examples are Clapton's Tweed Champ and Page's Supro, but in hindsight even though they were budget models, they are tube tone machines due to their simplicity.
At the risk of sounding shallow and pedantic, he says the $50 Kay was his first guitar, and that the majority of his college practice sessions (pre-Rage) were the Explorer. The Canadian Pawn Shop guitar and solid state amp he mentions were used on "Tire Me", a single track from Evil Empire. (He even mentions the Drop D Tele in this video)I didn't have the source but after reading your reply I found the video where I heard it.
https://www.youtube.com/watch?v=BYqmu1GxV7o
Let's give credit to the ol' blues players with this topic.
In the hands of talentless guitar players like Tom Morello, cheap gear is just appropriate, as is in Kurt Cobain's, hence Nirvana's first album.