Chip, I don't splice my hitch cords but I found the exact same differences between 5/16" cord and 3/8" cord. The 5/16" would always end up binding after some use but the 3/8" is much smoother and more predictable. It also doesn't get as hot since there is more area to disperse the friction heat.
Plain Jane double braid polyester such as New England Sta-Set. It will melt quickly when used on a new lifeline, but once your lifeline is fuzzed up a little the cord lasts a long time. It's cheap, strong and just the right firmness.
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