Looking at that, I'm not surprised you have a 1 gallon dead space. When I used copper tubing, I had the pickup point right near the drain/bulkhead fitting. That way, I could tilt the tun and get more out. I now use the stainless plumbing hose and seem to lose 0.5 gals during my brewing (which seems high).
But not a big deal; you can just factor it into your calcs. It won't hurt your efficiency much. Personally, I'd redo the plumbing at some point, but that's just me.