2AWG is just fine - I happened to select 1AWG as a compromise between "pure overkill" and "handling ability" and "shipping weight." 2AWG should give you a working ampacity of 250-275A in most lengths you'll see underhood (< five feet,) and I've not seen alternators that big that we can use yet - MG tops out around 200-220A.
And no, that's not what vice grips are for. They're not going to give you the rock solid mechanical connection you want for high-current electrical contacts, and that means that the life of the connection will be rather shorter (underhood connections are most susceptible to vibration - a proper "cirmp" connection is actually a "swage" connection, where two bits of metal are cold-formed into each other. It's a bit more than just a "squish," and that's why crimp dies are shaped the way they are. I've no trouble with people making their own cables and such - but don't half-ass it, y'know? Most people don't like doing jobs twice or buying parts twice, and I don't like selling parts twice - which is why I make them the way I do.)
Welding cable has finer strands than typical stranded heavy-cable, and what you're using sounds like "battery" cable instead. Heavy battery cable runs strands about four times the gage size of welding cable, which makes it much more stiff (and actually less tolerant of handling and flexion stress.) And, the insulation is different - I find that welding cable is rather tougher and more resistant to chemicals, petroleum, and heat. (There are even better grades of cable out there, but they cost three or four times as much. Compromise, again.)
