It is a good idea to power your TIU through the AUX port rather than Fixed 1, but no need to keep it on all the time. Just plug the AUX power source into a strip and turn it on/off each time you run trains.
In my case, for convenience, I have most of my electronics plugged into a strip connected to a common light switch. I just flip the switch and everything fires up, but no need to go to that extreme.
As to the lights, one alternative is to buy a bottle of paint, such as Tamiya Clear Yellow, and paint each bulb as heavily as needed to turn the brightness down.