I'll do my best to answer some of your questions. Bare Bright, to me, would be thick sheet copper or copper pipe that is clean, without solder or much oxidation. He's probably right that you'll almost never get bare bright.
As for number 1 copper, he's right on that too, wire needs to be at least as thick as #2 pencil lead to be considered #1 copper. I believe it has to do with when they process the copper, the thicker wire will melt better with minimal loss, whereas the thinner wire evaporates/ disappears at a higher rate so the price is lower to make up for that.
As for advice, I would keep stripping wire. If there's a good amount of copper in the wire, or if you have a lot of free time, then it can be worth stripping a lot of the wire you get. The difference is very large. For un-stripped wire, you'll usually get insulated #2 prices (maybe $1/lb if you're lucky) whereas if you strip the wire, you'll get the #2 price that they give you (2.10/lb).
The guy at this yard is telling you the truth from what I can tell. I have a question for you. Is this your only source of income? If so, then I would probably keep going to the same yard, if it is a side-gig, then I would save up the good stuff (copper and aluminum) and bring it to the other yard when I have a good stock pile. The prices at your local yard aren't very good, and I probably wouldn't bring anything other than steel there, If I could help it.
As a final note, I'm sure others would mention it, read everything you can find on this forum. It will help you find profit in places you didn't expect.
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