Drupal - How do I add default values to a database table using hook_install()?

The better way is to do it inside hook_enable(); at the time the hook is invoked, the module is already installed, and the schema of its database is available to Drupal, and to drupal_write_record(). As the hook is invoked all times a module is enabled, and not just when the module is installed, the hook implementation should check if it didn't added those database rows already (e.g., it should use a Drupal variable containing a boolean value).

As example of module that uses hook_enable() for a similar purpose, you can check forum_enable(), or php_enable() (which adds the "PHP code" input format).

function php_enable() {
  $format_exists = (bool) db_query_range('SELECT 1 FROM {filter_format} WHERE name = :name', 0, 1, array(':name' => 'PHP code'))->fetchField();
  // Add a PHP code text format, if it does not exist. Do this only for the
  // first install (or if the format has been manually deleted) as there is no
  // reliable method to identify the format in an uninstall hook or in
  // subsequent clean installs.
  if (!$format_exists) {
    $php_format = array(
      'format' => 'php_code', 
      'name' => 'PHP code',
      // 'Plain text' format is installed with a weight of 10 by default. Use a
      // higher weight here to ensure that this format will not be the default
      // format for anyone. 
      'weight' => 11, 
      'filters' => array(
        // Enable the PHP evaluator filter.
        'php_code' => array(
          'weight' => 0, 
          'status' => 1,
        ),
      ),
    );
    $php_format = (object) $php_format;
    filter_format_save($php_format);

    drupal_set_message(t('A <a href="@php-code">PHP code</a> text format has been created.', array('@php-code' => url('admin/config/content/formats/' . $php_format->format))));
  }
}

As shown from those hook implementations, the code could necessarily need to be executed all times the hook is executed; it could also be the code needs to just executed once, as in the case the default values added to the database cannot be altered from the user, who doesn't have a user interface to alter/delete those values.

I'd go with db_query / db_insert (D6 / D7) in hook_install().

It's not considered bad practice (and nobody is ever forcing you to use drupal_write_record()).

It is not uncommon for people to disable and re-enable modules, and in that case your code in hook_enable() would fire each time. which is not nice.