Actually only in the intro AFIK. All the in-game stuff uses mode 1 or 2 (3 or 2 layer modes with 4bpp or 4 & 2 bpp).
As for the usefulness, I was skeptical too, but Tomaitheous gave some really nice examples of that.
Remember you get a full 128 palette entries and (unlike the PCE's pseudo-2bpp mode) the SNES remaps those to 32 3 color palettes for 2bpp cells, so there's a LOT of flexibility.
There's a ton of MD games with tiles often having close to (or less than) 4 colors per cell due to sheer palette limitations. (Tomaitheous showed a 2bpp version of Thunderforce IV's 1st stage that looked pretty much identical to the MD but was done with the 3/4 colors per cell using 16 subpalettes -iirc it was from a PCE demo he did)
Sprites on the SNES are always 4bpp AFIK.
What might have been more useful is a 3bpp mode with 7/8 color tiles (stored as 3-bit tiles in VRAM, saving space), or 5-bit modes for 31 colors. (8-bit is a really big hit to VRAM space and bandwidth, but 5-bit could have been really useful . . . especially since the SNES -like the NES, SMS, and PCE- used planar graphics that allow flexible color depths compared to packed pixel -packed pixel is practically limited to 1, 2, 4, 8, and multiples of 8 thereafter -though technically you could have 3/5/6/7 bit packed pixels, it would be a pain to deal with that sort of data unless the system had a custom processor designed for managing such word sizes)
Most PCE developers probably would have killed for a dual layer 2bpp BG mode (apparently hudson had considered it but ended up not implementing it), especially if CRAM was used as 64 3 color palettes in that mode. (and you'd save VRAM space and bandwidth by using 1/2 the color depth -unlike the PCE's current 2bpp unpacking mode that pads 2bpp graphics to 4bpp on the fly and uses the same amount of VRAM, but less ROM and bandwidth)


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