A compromise version:

    def _f_part(item) -> str:
        match item:
            case str() as s:
                return s
            case Interpolation(value, _, conversion, format_spec):
                return format(convert(value, conversion), format_spec)

    def f(template: Template) -> str:
        return ''.join(map(_f_part, template))

I very frequently use this helper-function (or sometimes a generator) idiom in order to avoid building a temporary list to `.join` (or subject to other processing). It separates per-item processing from the overall algorithm, which suits my interpretation of the "functions should do one thing" maxim.