True, wood burns, but if you use gfci circuit breakers (as I do) then shorts that last are pretty rare. Plus, if it's water in the wood that causes the short, it will be hard to ignite the wood that is so waterlogged as to cause a short. So, while I agree with wood wouldn't be the right material of construction for commercial applications I still don't see an issue for our uses, given the proper circuit protection - good grounding and gfci breakers. Oh, and your comments would apply to the toolboxs some folks use for control boxes - they aren't flame retardant.
About 17 years ago, I used to work for
this company (sorry the site is in Spanish.- The company is in Argentina), building digital measuring ans safety equipment for industries.
One day, the chief engineer had to build a very complex selector switch for a steel company. The switch was a 24 "floor" (IDK if that's the right English way to say it), 6 position, 3 phase, 100A selector switch, for an old machine (again, I don't know the English name, sorry) that takes the steel, heats it up, and rolls it into what's (so imaginatively) known as "hot rolled steel".
Once he finished it, he proceeded to test it. For that kind of equipment, it's mandatory to do the test at full voltage and current, so the guy had a test bench set up, with a 3x220/3x380V connection, a 3x100A breaker, and a big bank of purpose made resistors to provide the load.
For some reason (even he couldn't say why), he decided to use pliers to move the switch. The moment he did (I was with him at his office, taking a "non sanctioned" break), the switch shot an 8 ft. long flame, the office door (8 feet away) instantly caught fire, and the breaker literally melted, together with the wires, most of the test bench, and, of course, most of the selector switch.
The reason I'm telling you this is to illustrate how powerful an electrical fire can be. Water evaporates at 212*F. An electric spark is typically over 4900*F. The box can literally be soaking wet, and it wouldn't make a difference.
Of course, you have the right to decide for yourself what risks you're willing to take, but there's a difference between taking your own risks, and advising others to take the same risks you do.
About the plastic toolboxes, yes, most of them are fire retardant (although I agree that wouldn't make much of a difference in the scenario I posted above), but, most important, most of them are made out of PVC, which is self extinguishing.