If one were to use this for an escrow service between Party A and Party B, here's how I think it would look:
Escrow X says "I'll hold the EOS until all criteria of the transfer are met by both parties"
The msig would need all 3 to sign - Party A, Party B, and Escrow X.
So in this scenario, Party A sends EOS into Escrow X, Party B sends whatever they were supposed to Party A.
Both Party A and Party B are happy, they both sign the transaction of the msig, and report their approval to Escrow X. Then Escrow X also signs the transaction, and the EOS gets transferred over to Party B.

There are cleaner ways of setting this up, but yes it could be used for escrow.