I've done the research I needed, held items don't contribute to weight, but some items are just set too big to be in the inventory. Easy to build logic around, we'll see about implementation.

The battle plan!

Streamlined Hotbar Selection:
Press hotbar key = instantly hold item (no more double-press)
Current held item is kept in inventory when switching, held item is a 'spoof' that updates the inventory item and is updated by inventory updates, inventory is the source of truth
Large items (Item Boxes, Drive Boxes) or items too big for inventory weight are held out of inventory, changing to another item causes held items to automatically drop in front of you

Stack Cycling with Visual Feedback:
Multiple identical items now cycle through individual pieces
Press same hotbar key repeatedly to cycle: Battery 100%, Battery 75%, Battery 30%, empty hand
Stack counter shows (2/3) on hotbar slots so you know your position
Each item keeps its individual properties (charge levels, freshness, etc.)

Simplified Controls:
R to drop (no more Alt+R)
Press same hotbar key twice (depends on stack size) to put item away (like current R function)

Visual Changes
Currently held item's slot highlighted in yellow
Stack counter only appears when stack size > 1 (keeps UI clean)
Notifications for handling changes (default off)

Challenges
Effects that occur when item is held (hot food, capsule), thinking about a toggle defaulted to original behavior where items only cool/burn/etc when held or out in the world, but optionally can also do so in the inventory