How has it not seen widespread use? Buy just about any consumer-grade power tool today, and inside will likely be some powdered metal components. They're in some of the high-end tools, too, and can provide excellent quality with decent design.

I have no clue whether these prototyping machines will produce parts of that quality, but the important observation is that 'good enough' is the key threshold. Many times you don't need the full strength of a machined steel part, just something a bit better than plastics can provide.