מותק שלי is used by Israelis, but it depends on the context.
If you say it to your child then it's fine, as I would say it's a relatively "intimate" expression. So I can imagine it being said mainly between closed doors when it comes to grown ups. Mainly toward women.
It is also used amongst grown-ups in a negative and cynical way. Something like "honey, you're gonna do as you're told" (honey being motek sheli). This is probably a slightly more common usage.
I think the 'Sheli' gives this expression its unique usage. Just using Motek is more generic and common. It has the same meanings but less "extreme". It's like "honey" and I can even imagine a woman saying it to a friendly colleague (man) that she kwows very well in a casual way.
It's like using the word "Sweetheart/Honey" lovingly or in a condescending manner. You can say it to a loved one in a very gentle manner. Motek sheli, ahuv/a sheli, khaim sheli - My sweetheart, my love, my life and etc.
Or you can say it with a smirk being all high and mighty, like: Sweetheart/Honey, don't mess with me, go play with your dolls or something.