Thank you all. The debate in my mind has been whether or not a self-compacting fill would be better, or if it would be better to compact fill. I agree with Oldguy, that the compaction would/could restore some of the value lost, and if it can be compacted in one 26" lift, that would be ideal...
Thanks Jayrod12, I'd think that would be fine above the footing, but this trench is 26" below the bottom. My concern with a free draining fill would be that as it drains, it could transport soil particles from below the loaded footings, which may allow the foundation to settle.
A contractor that I work with has apparently cut a 10" wide by 26" deep trench for a domestic water line, just outside of the foundation for an existing house. There's pretty much a vertical cut right beside the footing. It's obviously too late to stop them. How should they fill this trench...