question

1V drop (out of I'm guessing 12V) is about 8%. That's too high, but not crazy. It's not the fault of good quality well installed 1/0 wire only 16' long round trip. 130 Amps is also fine unless you have other factors that make it get hot like being it terminated on a fuse, in an engine compartment, or in a big bundle of wires in a confined space. If you are using high quality stranded copper cable, it should be good. My guess is the lugs were crimped on poorly. I have seen many people do this incorrectly and often times the lugs themselves or the crimper being used aren't up tho the job. You can test the voltage drop of the cable by probing the wire just in from the lugs to find out.

But yes, you can use two wire gauges in parallel and there are cases this is warranted. You have the caveats of fusing complexity and that it is just messy and tacky and in your case unnecessary. Keep it simple.

What do you mean a "single pair" of 1/0, do you mean 1x red 1/0 and 1x black 1/0, or do you mean 2x1/0 red and 2x1/0 black?

If you mean the former, then the installer made a very serious miscalculation there, as your stated one-way distance of 8' equals 16' round-trip, which is right at the 5m limit of 2x1/0 pairs... 1x1/0 isn't even an option, ever, in a 12v 3kVA unit.

Bottom line, yes, for best performance replace all of your 1/0 run with 2x2/0 runs as is called for at that round-trip distance (or take it back to the installer and have him correct his work).

Update: To keep things simple, I removed the long run of 1/0 cables and installed a pair of 2/0 cables, i.e. one black and one red.

Result: My voltage loss across the cables was reduced from about 1 volt to 0.3 volts! Total voltage loss is now about 0.48 volts. I can still make improvements by simplifying the battery box layout, but this is a huge improvement.