1. You could stick to 4awg, or go to a smaller wire provided that it can carry the current for the amps. If you go to a smaller wire though, you (should) insert fuses that match the capacity of the smaller wires (unless the whole shebang is fused at the battery at a level safe for the smaller wires.) Ground wire doesn't need to match the power wire (it's perfectly fine to be larger, for instance), but generally it's good practice.
2. Splice/solder works. Jamming two ends of the wires in together, provided they fit properly, also works. Electrically speaking, a Y is no different than a T. Just make sure there's a solid connection.
3. Are you planning on drawing the 12V from the battery or the PSU? The battery's power is unregulated; I don't know if the xenarcs are rated for the voltage range, but I wouldn't feed it into the USB bus. If you use 12V from the PSU, ground using the PSU's ground, not the car's, as they may be different. Aside from that, similar to above. It's generally better to run only one wire over any real distance, and split it at the end. Most AC adapters use standard jacks, so picking one up at RadioShack (or hacking one off an old unused adapter) should be easy. And, make sure your hub really takes 12V - I believe the USB power line is 5V, and it would make more sense if that's what the hub took. Mine takes 5V anyway.