My understanding from what I have read from the oasis team is that almost no one uses multisig. Not only that but people are going further and releasing funds before receiving their product.
You're right. FE is common practice. Sellers hate multi-sig because of a) bitcoin volatility and b) because they want the bitcoin in hand. And buyers will do whatever the biggest trusted sellers want and buyers accept that every so often, sellers will exit scam. Seems like it's a seller's market. If sellers start demanding XMR, then the buyers will acquire it. If not, then not.
I think this is more to do with multisig being an inadequate tool (for this particular application) than anything else. It's too easy to send a box with a rock in it the right weight and then show the arbitrator your receipt. So buyers prefer a trusted non multisig seller to a non trusted one accepting multisig. If multisig was a better solution people would prefer the latter.