>But oversizing fasteners is only good up to point; beyond that and you're trading off fastener strength which could never ever be used (due to the lack of ability of the wood to sustain those kinds of loads without breaking) against reducing the ability of the wood to sustain ever smaller loads as the holes get bigger.*
That sounds reasonable, and yet I'm not sure it's applicable here. It's a 1" hole in the face of a 5.5" member (2x6). In structural engineering plans that I've seen (see below) that would be allowed (for certain placements) w/o explicit permission of the engineer. From that I deduce that such sized holes do not substantially weaken the member. But perhaps there is more to it. Also consider that a larger bolt means the wood-metal interface is spread over a larger area, so lower pressure - perhaps reduces splitting?
>With lag bolts you could actually inspect everything with a torque wrench and the correct size of socket and that would work just fine.
True, but unless the lumber is pre-dried, it will shrink after construction. Whether it be lags, hex bolts, or screws, it will need rechecking after the wood settles.
All that said, I too would not have used 1" bolts. Seems like 1/2" or 5/8" would suffice. But my main objection to 1" is that it's overkill, and engineering is, after all, the science of achieving the stated objectives with the least resources. I'd love to see the calcs and assumptions of the professional engineer who mandated the 1" bolts.
From some structural engineering plans for a house:
Do not cut, bore or notch wood members expect where show in the details. Maximum holes at studs to be 0.4x width of stud. Maximum hole diameter at beam joist or rafter to be depth x 0.25, or 2 inches whichever is smaller, and are to be places within the middle third of span. Holes not permitted when depth is 4 inches or less. All other holes require engineers approval