Oh for sure - I think that this method has more efficacy in production environments ran by small businesses anyway, since best practices are rarely followed in many of them (until something happens that changes their mind on what they budget for haha), and even at that it is still a rare attack to see.
I am unaware of this type of attack ever occurring on a persons personal network, most likely because so few end users make backups, there is no need to go through the trouble of doing this, making this method useful only in highly targeted attacks.
We are definitely in agreement on proper backups still being the best method to recover from the vast majority of problems - even this one, depending on the backup solution.
This is kind of how VeraCrypts hidden partition feature works.
You start the process of the volume’s encryption and set a “false” password for it. It creates a partition that is encrypted with that password. When it finishes, you mount it and store “fake” files, the files you would reveal under duress. Veracrypt then takes in a second password and creates a “hidden partition” in the remaining free space of the disk - to be clear, that memory space still reports as unused/free if investigated, but the partition is there.
You can then mount that with your second password and store your actual files. You can work with files and folders in the hidden partition as needed, however if anything is added or changed etc in that first fake partition, the data in the hidden partition will be corrupted by those actions.
This means that so long as you plan ahead, someone can literally put a gun to your head and demand the password to the encrypted disk, and you can give them one that works without revealing the data to them.
In theory, since the data in the hidden partition is encrypted and unreadable, it is impossible to detect that it exists in the “unused” space of the disk, even by a forensic analyst. To them it would just look like old, randomly flipped bits that came from previous usage followed by a quick format.
Now, what’s really cool about this is that if you use the veracrypt bootloader, you can store and boot from an undetectable OS you store in that hidden partition:
https://veracrypt.io/en/VeraCrypt Hidden Operating System.html