I think you're right that widespread use didn't happen till around Mountain Lion. FV1 had lots of quirks and performance issues, FV2 was when they first delivered nearly seamless high performance encryption.
Not a coincidence: Apple released FV2 only after Intel added AES-NI cryptographic accelerators to all their CPUs. You could enable FV2 on Macs which lacked AES-NI CPUs, but it cost a lot more performance, both disk and CPU.
As mentioned, by the time FV2 rolled out, on sufficiently new Intel Macs, you could turn it on with nearly zero performance loss. The Secure Enclave approach has even less overhead than that, but I remember enabling FV2 on a 2011 MacBook Air and not noticing any difference.
I don't recall any secure enclave breaches. The T2 issue was a jailbreak which allows someone with physical access to the device to boot unsigned code. As far as I can tell from various articles about it, the "Checkm8" bug exploit can't be used to decrypt data on the SSD. This is because the bug targeted by Checkm8 lies in the boot ROM used to start up the main "application" processors, not the boot ROM for the special Secure Enclave Processor (SEP). Checkm8 can boot a modified OS, but it can't force the SEP to decrypt an encrypted volume without a user entering the secret protecting it.
T2 was derived from A10. The Checkm8 jailbreak affects seemingly everything up to and including A11, and was fixed in A12. M1 is A14 generation, so it's not affected. (That said, Apple's revised Secure Boot for M series SoCs allows Mac owners to "jailbreak" already - no need to use an exploit tool like Checkm8, you just follow directions for configuring the Mac to a lower security state. This is how Asahi Linux for Apple Silicon works.)