You have the right to pull the other offer at any time.
Also note that a back up offer can HELP the other deal happen. In other words if there is any problems, the listing agent tells the buyer agent "we have a back up offer, so you better not ask for too much in repairs."
Another option is to verbally tell the listing agent "if the seller so much as sneezes, let us know."
I would talk to him about it. If he is your Buyer's agent - you should both have very open communication. Ask him point blank why he thinks it is a good idea....