Multiple undo support was disabled in 2009 when integrating TextEditor with Cuis. This can be found in the history of the Morphic package (or http://source.squeak.org/trunk/Morphic-ar.149.diff )
Cuis is a Squeak fork aimed at simpler code in general and, in particular, simpler Morphic (all code must be understood by one programmer, but still remain powerful), see http://www.jvuletich.org/Cuis /Index.html .
It seems that the main use of TextEditor is in the browser and that the methods are short enough to not require multiple cancellations ... At least there were no complaints before that, and I think I noticed. It is even possible that this could be accidental, and not deliberate ...
However, the object used to store multiple cancellation logs still exists (EditCommand), and there are even Preferences (multipleTextUndo), which is currently not present but can be restored ...
It would be nice to prove yourself in order to understand how difficult or simple it is to restore this function. A good start is to track the use of EditCommand and multipleTextUndo in the old version of Morphic.