When setting hardware timers as interrupts, should I prefer a lower prescaler value or a lower CTC?
If 'clock tick' count (here 1024), timer width and  MCU clock used are constant (a fixed value), I would not go for last option i.e. prescalar 1024 and CTC of 1. Here are my reasons (specially for Arduino ) 

1) When CTC is close to zero ( like 1-> 10), sometimes timer behaves as if count is zero and outputs a square wave (with 50% duty ratio) with half the demanded frequency. So make CTC reasonably big. But again selecting a high clock frequency (pre scalar 1) may also show reduced accuracy. A intermediate option I think is better.

2) When count CTC changes dynamically in a process, timer pre scalar should be selected such that CTC count will always be less than or equal to timer width over whole process. 

i.e. the maximum 'timer tick count' should be comfortably accommodated by the timer with it's given width. Even here same dilemma again occurs, then selection based on point 1 is better.

If this is not enough, then only way I think is to implement each case  physically and check which combination gives you the best results. Practical results I think are more reliable ( may be you will get a board specific efficient combination!)