I have a switch as you have and a TWC controller, and when I spoke to Adverc at the LBS they said leave it on "Both" - I have 2 new identical batteries so perhaps it will work, but I still tend to alternate between 1 and 2.
I am very surprised by the answer Adverc gave you.
It is never a good policy to have two batteries connected in parallel, unless they are permanently connected this way to double the capacity.
As soon as the batteries are connected, unless they are both equally charged (discharged), a current will establish from the higher one to the lower, actually discharging the "best" one into the "bad" one.
Of course, having two identical, and new batteries is the best of cases. Nevertheless, after, say, a night sail with all the gizmos running on one of the batteries for several hours, there will be a serious unbalance between the two.
My boat is wired according to this diagramm #1 since years, except for the "isolator" which I don't have.
The other difference is that the "1-both-2-0" switch only connects either one, or both batteries to the engine's starter. The "sevices" are connected solidly to the battery #2. Of course via "main switch", CB's, etc.
In this configuration, the "1-2-both-0" switch, is only an emergency switch allowing me to start the engine from either, or both batteries, if needed. As a rule, it's always on "1".
Charging the batteries occures through the splitting diodes, and has the advantage that the lowest battery gets the most part of the charging current, untill both are level.
Another advantage of this configuration, is that I only need a smaller (45 or 65 Ah) battery as starting one.
I cannot remember having had to start the engine from battery#2, let alone from both, since I implemented this configuration, fed-up as I was of starting the engine by hand, or with all sort of jumper wires and borrowed batteries!
IMHO, it's the safest configuration, as the starting battery, is used for this - starting the engine - and for this only. Whenever the "service" battery is competly down, you still can start the engine, and run the services from the alternator.