I couldn't tell from the photos - what seems to get the hottest (i.e., where is the worst damage)? Is it where the wire wraps around the screw or where the terminal attaches to the circuit board inside the relay?

Damage from heat means there's a high resistance at that spot for the current being carried. Some general thoughts (which may or may not apply to your case, and some of which have brought on counter-arguments in past threads) -

* Make sure the wire gauge is adequate for the current.
* Make sure no strands are nicked or cut off when stripping the wire. Missing or damaged strands won't carry their share of the current.
* Make sure there is NO wire insulation under the screw terminal - wire strands only. Tightening the terminal on the insulation can leave the wire strands somewhat loose.
* Make sure all strands are under the wire capture part of the terminal. Strands not captured can't carry their share of the current.
* Always retighten screw terminals periodically.
* Solder creeps with pressure. Don't tin stranded wire being used with a screw terminal.
* Don't let wires flex at fixed terminals with use. Doing so can eventually lead to metal fatigue at the terminal, leading to higher resistance. Doing so also puts a bit of push-pull action on the terminal; over thousands of movements this can then lead to the solder connection degrading with time. Strain relief the wire somehow away from the terminal so the flex occurs somewhere other than at the fixed terminal.
* In an application where wires flex constantly with use, consider using high-strand silicone insulated wire like that often used in RC hobby stuff
* Where I worked, the assembly techs were not allowed to attach stranded wires directly to screw terminals. Stranded wire always had to terminate with a lug, crimp pin, or whatever that could then be properly grabbed by the screw terminal.

IMO, the majority of issues people have had with the OEM MakerFarm heat bed relays were caused by wires flexing at the relay every time the heat bed moved.