Yeah, at first glance it looks like double-taxation. My thought is that when it comes time to withdraw or convert, we'll be in a low/no tax bracket. This tax year, DW qualifies for 100% tIRA deductibility, and we both should be next year, so why not take advantage.
You do have a point though. If the whole thing is rolled over, it won't count towards the annual IRA contribution limit, which I'll end up maxing one way or another anyhow, so greater potential for long term growth there. But at least it's an option to consider.