Multi-Team has always worked in private match, and always wondered why no one really ran it on servers. I think I got my answer.
For servers, there is a commented out line for certain gamemodes labeled:
gts TeamCount 2
That enables Multi-Team for that mode. Hosting a server with the value set to anything higher than two DOES work, the server loads the multiteam fastfile and everything is okay there.
But when the client goes to connect to the server, it doesn't check for the TeamCount dvar set by the server, therefore not loading the multiteam fastfile. You can instantly see the side effects.
Players would spawn in with a few graphical errors, such as the missing texture behind the team logo on the scorebug, as well as not having a weapon viewmodel or viewhands. The weapons do work though, as well as killstreaks and equipment. There is also no battlechatter or announcers for these bugged teams.
Enemies and teammates will also show up as black boxes on the ground with normal hitboxes. Killcams have a chance to cause your game to minidump.