Yeah - some of the modems were. IIRC: Sam Leffler (sam "usual email punctuation"
errno.com) did the original FlexFax SW and we had a couple kicking around. My memory is that the modems that could also support Fax in those days, sucked at UUCP, so most of us did want to dedicate a phone line to one of them.
Also the scanner interface was not very easy. We tried to replace an HP fax machine with SW, including a scanner and fax modem, but it was not very satisfactory for the non-technical types.
I don't have any memory of "large-scale" use however. What was cool was some of the printers knew how to use PS as the format, instead of the 1860's style scanning [yes, FAX was invented for the US civil war and originally ran over telegram lines - the current format is just a super-set of the old mechanical scan system from those days].