My understanding of the situation is that Hawai'i is actually used quite a bit as a spelling in Hawaiian English, and that it's not restricted to purely Hawaiian language texts.
It is, in part because there are a ton of place-names and the like derived from the Hawaiian language that also use apostrophes in place of the 'okina (but no macrons, probably because English doesn't use them), but that's only Hawaii and literally everyone else in the other 49 states, as well as the federal government, uses the spelling "Hawaii".
It's the same reason why "O'ahu" is almost never spelled that way in any English-language texts written outside of Hawaii.