This paper addresses the problem of uplink transmit power optimization in distributed massive multiple-input multiple-output systems, where remote radio heads (RRHs) are equipped with 1-bit analog-to-digital converters (ADCs). First, in a scenario where a single RRH serves a single user equipment (UE), the signal-to-noise-and-distortion ratio (SNDR) is shown to be a non-monotonic and unimodal function of the UE transmit power due to the quantization distortion (QD). Upon the introduction of multiple RRHs, adding properly tuned dithering at each RRH is shown to render the SNDR at the output of the joint receiver unimodal. In a scenario with multiple RRHs and UEs, considering the non-monotonic nature of the signal-to-interference-plus-noise-and-distortion ratio (SINDR), both the UE transmit powers and the RRH dithering levels are jointly optimized subject to the min-power and max-min-SINDR criteria, while employing Bussgang-based maximum ratio combining (BMRC) and minimum mean squared error (BMMSE) receivers. To this end, gradient and block coordinate descent methods are introduced to tune the UE transmit powers, whereas a line search coupled with gradient updates is used to adjust the RRH dithering levels. Numerical results demonstrate that jointly optimizing the UE transmit power and the RRH dithering levels can significantly enhance the system performance, thus facilitating joint reception from multiple RRHs across a range of scenarios. Comparing the BMMSE and BMRC receivers, the former offers a better interference and QD alleviation while the latter has a lower computational complexity.