Indexed color formats stopped being supported on GPUs past roughly the GeForce 3, partly due to the CLUTs being a bottleneck. This discourages their use because indexed textures have to be expanded on load to 16bpp or 32bpp vs. much more compact ~4 or 8bpp block compressed formats that can be directly consumed by the GPU. Shader-based palette expansion is unfavorable because it is incompatible with hardware bilinear/anisotropic filtering and sRGB to linear conversion.

Tbf, you wouldn't want any linear filtering for pixel art textures anyway, and you can always implement some sort of custom filter in the pixel shader (at a cost of course, but still much cheaper than a photorealistic rendering pipeline).

Definitely might make sense IMHO since block compression artefacts usually prohibit using BCx for pixel art textures.