The recipe calls for 2 tsp of butter divided but only adds 1 tsp to the cooked tomato sauce. When does the rest of the butter get used?

Sorry - that was an error. The second portion gets added when the rice is cooked/ at the end

Dougy - since the butter is optional and a small amount, you could just omit it.
If you want to use it, two possible places/times are
1) adding it to the pot when cooking the rice
2) adding it just before serving, for a bit if extra flavor and mouthfeel.
Enjoy