AO* has rarely been used in practical applications, to my knowledge. It is useful for searching game trees, problem solving etc. but in most cases more domain specific search algorithms (e.g. alpha-beta pruning for game trees, general or domain specific planning algorithms) are used instead.
In particular, AI uses knowledge-intensive approaches and in practical applications heavy use is made of domain specific knowledge or problem conditions to produce better (faster or more optimal solutions).
Game search is an example where full-breadth search is standard, but this may because of the small (relative to other domains) size of the search space. Even in game tree search, extensive use is made of problem specific features, i.e. often search is terminated only in quiescent states (i.e. not during a forced exchange or when there is a check).
In planning, often knowledge is used to guide a search of a generated solution space rather than doing a state space search. This gives non-optimal solutions but for many domains it yields reasonable solutions at much less cost.