1. Well no, it's not backed by any shares. Whenever somebody redeems SD->STEEM, new Steem is printed up based on the price ratio of 1 weeks average. The 1 week average/ waiting period is to disincentivize front runners/arbitrage. But it only creates extra Steem when redeemed, it's not backed by anything, or technically by inflation, but that is not very good.

2. Of course it does, currencies back eachother up. All central banks hold foreign reserves, everything is interconnected and back eachother. The same way Bitcoin is, and should be the reserve currency of the crypto world. I even think Steem should be an alt-chain of Bitcoin after Segwit will allow it. But nontheless, backing Steem with BTC would be a very wise idea, it would restrict inflation, and give value to it.

Look we dont need to invent the wheel again, we already have a stable currency like BITCOIN, we should just build on that. Steem should not try to reinvent the wheel, we should work on the social media aspect, while the value should be derived from Bitcoin.