1/0 wire is massive and a lot to hang on to a vibrating alternator
. You can make it work if you are able to secure it to the alternator
bracket so the mount vibrates the same as the alternator lug where the terminal goes and then secure the cable again as it goes away from the motor
. The lugs on most small frame (if that is what it is) alternators are not really big enough for a cable that size. IMO
You shouldn't have that long a run to make so IMO I would get the right size wire and lugs and do it right. As far as mixing and matching wire sizes it shouldn't make any difference if you have a small size in the middle or whatever compared to the other pieces EXCEPT that you have to have multiple connections which is never a good thing for a high amp circuit.
You should "ground" the alternator to the same stud as the main engine
DC negative "ground" and it should be lug to lug. You could also ground to the main DC common ground as well. The ground wire should be the same size as the alternator positive (or at least as big as the amps call for). They don't have to be identical if the positive if bigger than necessary.
If it were me I would put on #2 wire for both. Sell your surplus lugs on ebay or something. Don't be penny wise and pound foolish.