Looks like a yes, but it was hard to find this example: https://www.blendernation.com/2020/10/23/behind-the-scenes-f...

All other 3d games I found made with Godot look like they came from the 90s. 2d capabilities look great though. There's probably also some selection bias, it's probably not the first choice for most who want to make a 3d fps.

I know Cruelty Squad was made in Godot, but I’m not sure it’s quite the best game to showcase general 3D FPS viability ;)

Yes. Truth be told for any engine you'll be more limited by the size of your art team then anything else.