a.
I would argue that most butt welds are for identically specified spool pieces, and therefore 99% of butt welds are treated as case 1.

Case 2 is an exception to the rule where you may have two different piping specs used for a given service, but where the transition can be made up within the weld. I would hazard a guess that most cases you require a transition piece. This transition piece would fall under case 1.

b.
You should know when you have mismatching piping specifications, thicknesses, etc. Average should be at spec.

c.
In the event you are stuck with a high SIF with stresses, you should opt for a transition piece.