Anything can be abused.
Fractional reserve doesn't seem possible with BTC, no way you could lend btc you didn't have. But it would be possible to create a system that lent $ (or some other fiat) based on holdings of BTC. I don't see why anyone would, but thats a different question.
Fractional reserve banking doesn't allow lending money that doesn't exist, it just permits lending money that you don't personally have even though someone else does.
It is possible to do fractional reserve banking with bitcoin. Fractional reserve banking
does allow to you to lend money that doesn't exist-- indeed that is exactly what banking is all about. The banks lending more money than they have on deposit is how money is created!
The fact that the bitcoin supply is limited to 21,000,000 doesn't stop the banks for lending out more than that-- if all these bitcoin were deposited in bitcoin banks then using the current reserve of about 10% of traditional fiat banking the banks would lend out 210,000,000. What the banks are really dealing with is not bitcoins but rather promises made about the bitcoins: that's why they can create more-- a promise is a very easy thing to create while a bitcoin is not so easy.