Is wrapping Roxul around hot water tank pipe a fire hazard?
No. As you seem to be aware, Roxul is a mineral wool product, and mineral wool is fireproof. You're right that it will "trap the heat" but this is exactly what you want and the result will be less heat transmitted to the surrounding wood, not more. Mineral wool is actually one of the few materials you can safely use for filling these kinds of spaces. Proceed with confidence.