According to the standards EN 15804 and ISO 21930, and the timber PCR, EN 16485, the carbon sequestered into biomass and stored in timber products is considered as a removal in Module A1 and needs to be considered at the end of life as well, as a balancing emission whether the timber is burnt, used for energy recovery, or recycled or reused. For recycling/reuse, the carbon is transferred to the next product system, so reported as an emission in the product system (in C3) and a removal in the recycled/reused product. For landfill, the carbon is either emitted or transferred to nature (reported as an emission). Thus, for a building, there is no net benefit in the reported GWP over the life cycle from the sequestered carbon stored in products, using EN 15804, ISO 21930, EN 16485, EN 15978 etc.
There are benefits from storing carbon for long periods in buildings, but these are recognised using different metrics, for example the removals from increases in Harvested Wood Product used in national GHG accounting or the measurement of radiative forcing over time.
As you say, using timber inefficiently is not sustainable, and there is no benefit at building level, or globally, in using more timber than is needed in buildings. Where timber reduces impact by substituting other materials, then if a given timber quantity can be used in to substitute other materials in a larger number of biuldings by using it more efficiently, then there will be greater benefit. if one building uses unnecessary timber to “take advantage of sequestration” then substitution will be lower and the amount of sequestration will be the same whether it is in one building or many.
My motto is “more buildings in timber, not more timber in buildings”.