I've always had a difficult time wrapping my head around this acronym. What counts as "outer"? What counts as "inner"? And yes, when there are more than two items (not necessarily variables!) to be multiplied, you suddenly have to ignore this little trick, because now it's confusing to know what to do about the middle stuff -- and it doesn't take into account non-commutativity either.
And yes, some of the problem may be due to my (very recently diagnosed! at least, formally) autistic mind. But I cannot help but think that if someone with a PhD in math struggles with and largely ignores "FOIL", then the problem may be with the technique, and not with the people who don't understand it.
i think your problems with foil can be extended to the general way math is taught. at least for me, it was always full of tricks, little rules that can be broken sometimes, and i was constantly learning new things that made me realize my old teachers had taught us tricks to shortcut solutions.