You can weld the seams with E7018, if supported by PQR and written procedure. You just arent required to if utilizing backing strips in which case you could use normal cellulosic construction procedures. If the welds do not contact the carrier pipe then they are not considered in-service. For example: if you are installing type A sleeves where only the seems are welded, or a compression sleeve, then no in-service procedure is required assuming reinforcing bars or backing strips are used.
But to your last question, I disagree with your welders. The federal regulators, API committee members, EWI and people from PRCI all have guidance material on this issue. This is not asme, rules and ideals about backing are different than what some seem to assume. If your procdure was qualified with E6010 open root then you would have to run a 6010 root. But if you are attempting to qualifying a procedure with a cellulosic root then fill/cap with E7018 - good luck. Even if you get acceptable results repeating those results on your product line is a pipe dream (so to speak). Industry standard is lohy root/fill/cap. We qualifiy welders with a low hy open root on Butt/Branches and then sleeves pretty much weekly. I would check out the hot-tap forum board on EWI's website. This issue has been hashed out in detail. The post includes many of the top engineers who wrote appendix B and work for EWI, DNV, API and so on....
Now, is the requirement practical? That's a different question. What I can say is that after the welders put in the time to be proficient and qualify with low hy on open root passes (and fill/cap) the skill set transfers easily to our field welds where it's pretty much impossible to have an open root situation with product flowing other than on various branch style taps. which require E7016-H4 root passes for our system.