As I understand the paddling technique: 1) you plant the paddle forward with your right arm, 1b) your right leg is bent at the knee and 1c) your right hip is rotated forward by your straight left leg pressing against the left peg. 2) While pulling with your right arm and 2b) rotating your right abs sternward you are also 2c) straightening your right leg by pressing against the right peg, 2d) and allowing your left leg to flex which rotates your hips (and the seat). 3) Repeat on left and alternate left and right until race is finished. 4) A rotating seat that pivots around a vertical axis facilitates the hip rotation.

AFAIK, you are absolutely correct that hip/butt rotation is part of the 'rotation' for a powerful forward stroke. A lot of folks limit the rotation to 'spine twisting' with fixed butt which eliminates the leg drive power.
I think the concern with swivel seats for 'ordinary' sea kayaking is that there may not be enough 'security' for good bracing when things get rough....though I don't know if this is really a problem, as I've never used a swivel seat.
The thing that I DO believe in, and use, is a smooth hard seat that allows my butt to slide a bit. That's what the surfskis have (smooth molded butt recess) and the good ski paddlers certainly have lots of leg drive and rotation.

Shawna Franklin told us in a class: "I want to hear those dry suits squeaking on the seat when you drive with your legs and rotate!" I'm a believer; with a very modest 'engine room', I need the best technique I can manage (long way to go, still) when the going gets tough.

No more foamy seats (or tight hip padding) for me....