I found a full-grown rat inside one of my quails' cages one day, it was in the feeder. The cage is made of 1" square wire, and the feeder is a long chick feeder. So they can definitely squeeze through some small holes!
I wouldn't use the 1x2 fencing, unless you are sure nothing can get them, like if they are in a secure building or such.
Many of my cages are 2x2, and those are each 2' high as well. I think 10" might be a bit short, but it should be okay for 'normal' sized birds. The males stretch up when...