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Although I do agree with you, but we still don't know of the details of that battle. Whose to say that both Mu and Onoki didn't want to utilize an island radius Jinton (or any type of Jinton for that matter) because of the innocent civilians within the vicinity?
They weren't in any kind of busy area. There is nothing but that one building near where they were at, so bystanders can't be an excuse. What the manga shows and heavily implies is that a Madara not going all out>>Mu and a younger Onoki. Onoki believes this as well, only more proof that the result was because of Madara's strength, and not any limitations they put on themselves.