Useless factoid: "fout" means "error" in Dutch. Seems appropiate.
The term 'FOUT' is actually a nod to a ten year old bug named 'Flash of Unstyled Content' (FOUC). It occurred in early versions of Internet Explorer. One would first see unstyled content while the CSS was still loading. http://bluerobot.com/web/css/fouc.asp/
Between modernizr and the google font loading engine it's pretty easy to handle the FOUT issue. It's a pain in the ass, but manageable after a little tinkering.
http://paulirish.com/2009/fighting-the-font-face-fout/ describes two different methods you can use to fight it -- I prefer the first where you hide content till load (or 3 seconds) in FF 3.5+
Last time I tested the FF4 betas the FOUT was still present.