I have carefully read Terry's report about the effects of thread on wooden flutes. Its a very interesting and thorough study - like most of Terry's studies, which I greatly appreciate, by the way. While I don't dispute his findings, I do think that they can all be explained by the thread having been wrapped too tightly around the tenon. Clearly, this can present a danger to the flute, over time, and clearly it is easy to wrap thread too tightly without realizing it.
My personal solution to this problem when thread wrapping has been to use a bed of beeswax melted onto the tenon, and then loosely wrap thread into that bed of wax. The resulting wrap of thread and beeswax can move with the wood as it expands and contracts. It does not come lose, and is not affected by moisture. It can be fine tuned for fit, and a thin coating of cork grease prevents the beeswax from being too sticky. It looks good (depending on the color you chose for the thread) and traditional. So far, it seems to work perfectly well. I'll test it again after 100 years and let you all know how it holds up.
Having owned several (understatement) flutes, both modern and antique, and having restored a lot of antique flutes, I have come to the conclusion that both cork and thread work fine if installed correctly, and both can be problematic if installed incorrectly.
I personally prefer thread over cork for the following reasons. Thread is easier than cork to fine tune for a perfect fit, especially when dealing with a lot of different flutes with different clearances (as one would when restoring antiques). I don't have to use glues with nasty chemicals in order to install thread. I don't have to cut to precisely the right size in order to avoid a leak at the tenon. Thread is more robust in the face of frequent oiling of a wooden flute, especially when oiling the end-grain of tenons and sockets (oil can interfere with the cork glue and cause cork to come unstuck). I can select the color of thread to match the wood of the flute. I like the traditional look. These are mostly just my personal preferences and priorities.
Installing thread properly takes longer than installing cork, especially in a factory setting. I suspect this is the main reason why the majority of modern instruments have cork. Its just a cost issue - time is money. I don't mind spending time wrapping thread once in a while. Its therapeutic and I like the smell of melted beeswax in my workshop.