Although this claim is dogma among antievolutionists (at least young earth, flood geology types) it is completely false.
"Index fossils" (used to identify geological systems) are always and only determined -- and empirically so -- first in systems where the lithostratigraphy (the simple superposition of rock layers, independent of fossils contained) is uncomplicated and unambiguous. IOW, lithostatigraphy (determination of rock sequence) always precedes biostratigraphy (determination of fossil sequences) and biozonations (the lithographic ranges given fossils occupy) are only established based on clear and unproblematic lithostratigraphies.
Those index fossils can then be used to elucidate geological relationships in areas where the stratigraphy is more complex. But there is no circularity as it is never a case of fossils dating rocks. It is always a case of rocks dating other rocks, sometimes by means of the fossils contained. (IOW the complex or unclear stratigraphic systems are correlated to the unambiguous sequences where the systems of index fossils were originally determined.)
An equally clear, and possibly more compelling, falsification of the circularity argument derives from how, when and by whom the phenomena of "index fossils" was first discovered and utilized. It wasn't by ivory tower theorists, or even field workers conducting pure research, or by "evolutionists" at all. Index fossils were discovered -- and utilized -- by an engineer, William Smith, surveying England on behalf of a for profit canal building company.
Smith was a creationist who learned, by empirical and subsequently tested observation, that certain sequences of rock layers, and contained fossils, recurred in different locations. He eventually used this observation, in part, to construct the first geological map of England, which he produced and sold for profit.
To this day, "index fossils" (and the general techniques of biostratigraphy, and therefore the underlying assumption of geological faunal succession) are most commonly used not by evolutionary scientists, but by commercial geologists, in the highly competitive task of predicting the locations of oil, gas and mineral deposits, and used in making decisions upon which untold billions in capital are risked in drilling and mining operations.
So, if we accept your claim that faunal succession is merely an evolutionary imposition upon the geological record, how are we to explain that facts that: 1) it was discovered and first found to be a compelling fact of nature by creationists, and; 2) used heavily and continuously for literally hundreds of years by highly competitive for profit enterprises?
Love your explanation. I was very impressed reading the life of Mr. Smith, and his struggles as a working man for acceptance by the aristocratic academic scientists. We owe much to the work and imagination of the “gifted amateurs” among us, such as Jane Goodall.
The interesting thing relative to Darwin and evolution is that Smith operated at least a generation earlier than Darwin. I wonder to what extent Darwin and for that matter Wallace were influenced by Smiths pioneering work with fossils?