There are a few things to consider here, firstly the guys are 100% right ref fitting a by-pass relay (the rational for this is in the below post)
Ignition by-pass relay W - KZRider Forum - KZRider, KZ, Z1 & Z Motorcycle Enthusiast's Forum
When you talk about a blue block splice do you mean a "scotch lock" if so throw it away they are rubbish and will cause problems down the line.
Most of the 12v systems on the bike will still work at 10.5v (don't forget when it's running system voltage will be around 14v so these systems will then see 12v) the reserve lighting system connects to the "output" side of the brake-light switch so won't effect the input voltage
You need to do your voltage checks on the brown wire to establish if this is a result of the ageing process and the 2v drop is the sum of multiple smaller volt drops across several corroded connectors and switch contacts. If the bulk of the 2v is being lost across a single connector or switch you will need to address this ( a resistance of this level will build up heat which in turn will further increase the resistance and lower the voltage further. this cycle will continue as long as the system is turned on until it reaches a point where not enough voltage will pass to allow the system to work until it is switched off and cools down again)
I am amazed that a supplier has advised you to wire the coils directly to the battery, apart from anything this has potential safety risks. Doesn't this by-passes the "kill switch" so if you have a spill and are trapped under the bike with the back wheel eating your leg you can only turn it off with they key !!!!!!