It seems that Charles Bailey introduced 5 years ago a global settings instead of a per-mergetool settings, in commit 44c36d (February 2008, git 1.5.5+).
It wasn't documented properly before commit d1cc46 (July 2010, git 1.7.1.2).
So a keepBackup
in mergetool.xxx
wouldn't be correct indeed.
That would be a good topic for patching git.