Honestly that just seems like escrow that on-chain doesn't look like escrow due to the usage of Schnorr signatures? Because what the oracle does, does not seem to be much different from a classical escrow with a 2-of-3 signature scheme, with a rather arbitrary broader definition of what the escrow/oracle does (ie. both escrows and oracle functionally merely decide to whom the money goes).
From my understanding one of the main differences between a traditional multisig escrow and DLCs is that in DLCs the oracle doesn't need to know (and probably can't know if no party directly tells them) who has taken which position of the contract. The oracle doesn't even need to know that someone has taken a position as it only provides a signature from a nonce, not involving any public key from the contractors. This makes it more private.
There may also be legal differences: an escrower has control over funds, while an oracle, as it doesn't need to know the public keys, has not (so it is not necessarily a "crypto-assets service provider").
Again from my layperson's point of view, however, from a trust perspective there could be an attack equivalent to an escrow where one of the parties cooperates with the escrower to scam the other party. The cooperating party simply tells the oracle which position it took and bribes it. Of course the oracle can also take positions on a DLC platform and then manipulate the result.
