When I was an actuary we used to do “intern to hire” for unemployed recent grads, but I can’t imagine leaving a full time position for a contract-to-hire position. I think for me personally the opportunity would have to be really interesting and the comp upon converting to FTE would need to be at least double my previous comp (meaning the contracted rate would probably be something like 4x my implied hourly).
I've see that work before, but it was some time ago. The company also had a very large test department with separate management and kept to a strongly enforced waterfall-esque design routine.
Of course, it used to be a lot harder to ship out version 1.01 of the software.
I just assume it was a different world as this was in the days of US manufacturing, very limited set of software tools, high importance placed on domain knowledge as opposed to toolset, longer average stays at employer, lower wages for programmers. Probably not applicable to modern times.
In the past I would never have been interested in a contract-to-hire. These days though if the company and role is right, and this an option to short-cut a ridiculous interview process, I might spring for it.