Being open source and peer-reviewed doesn't mean software won't have bugs, exploits, or that backdoors can't be hidden in it. 'Peer-reviewed' sounds good on paper, but people can still miss things, be lazy, or not understand the code they are reviewing (but it works, so accept merge!). It's hardly the silver bullet to this problem.

As for your original post - moving to FOSS only is not viable for a lot of people. Linux has no good video-editing software, no good CAD tools, gimp has nothing on photoshop and even Libreoffice is rather lackluster when compared to the MS Office package. On top of that, javascript is used pretty much in every site these days, many of which require javascript to run. You can't seriously expect an average user to manually whitelist javascript in the sites they browse.

If the FOSS world had software that worked for everyone, people would use it. Right now, the only major group this is true for however, are developers. Until this changes there will be no 'year of the Linux Desktop' or whatever.