I've tried to use the harbor freight butt connectors, butt I think that the metal is a little thin. I was able to pull the connections apart. I have found the home depot, tyco electronics heat shrink connectors to be OK.
The harbor freight ratcheting crimp tool is not too bad though, and pretty cheap enough for the occasional user.
I like to use liquid electrical tape over everything, and a dab of dielectric grease on the wire before it goes in the crimp.
16 gauge should be fine for this- those lights don't use too much juice.
Also, you may want to consider using the type of switch that is made for nav lights. One position for stern only, another for front and back. This would eliminate the need for two wires in one connector.