Procedurally: It's been fairly common at early stages of startups I've run but the amounts have always been so small (few thousand $) that it's not really commensurate. I also always put early exercise in the SOP (you can exercise immediately to start the LTCG period, and vesting just works in reverse: company can buy the shares back, and a fraction of that right lapses every month). This is part of the potential upside of working for an early stage startup.

I agree when it's 10s of thousands or more the optionality isn't worth it for almost anyone. And it's hard to imagine borrowing to exercise could ever be worth it.

I've never encouraged or discouraged any employee from making an exercise decision (I don't want to get the liability of giving tax or investment advice). I don't even encourage them to file 83(b) except that when I explain why it's a pain for the company if they don't do so, everyone has figured it out immediately :-).