Companies that use mineral oil say that DOT fluid is dangerous in order to gain the favor of "green" mountain bikers. Seriously, that's why. Nope, mineral oil has none of the health benefits of mineral water, but by calling DOT fluid harmful, the big S and others think that they can bring on other customers because of their 'safe' and 'save the planet' design.
Mineral oil is just that, oil. Why use oil in your brakes? Because it's better than water. See, water 'could' boil (more likely in automotive applications and motorcycles) and could also cause corrosion and rusting of brake internal parts. So, use oil (IE, hydraulic fluid) instead.
Many years ago, american auto manufacturers started using the ancestor of what we know as DOT fluid (department of transportation 'approved' and regulated) today. It's still just oil, but contains a high number of alcohol groups on the oil molecules. This allows the fluid to chemically absorb any water that would seep into the system at joints or from the air in the resivoir. Water is bad, because it could boil as the calipers on your car get hot, and cause your brakes to drag, sieze, and lock up. DOT alcohol 'absorbs' this water, chemically stabilizing it, into a form where it cannot boil within the system. However, this alcohol is what makes it take the paint off your finder if you don't hose down your car after you bleed the brakes. It washes off with water pretty easily, but shimano sure likes to call it 'dangerous' and nasty. Oh, it'll dry out the skin on your hands too, kinda like if you cleaned your windows with windex and got it on your hands...
Why didn't all cars start using it back in the 1950s? Simple. The UK manufacturers were still using natural rubbers for seals, washers, gaskets, and wiring insulation. Natural rubber (as opposed to vulcanized rubber) cracks and breaks down, especially when exposed to alcohol. Natural rubber is crap, because it dries out and falls apart. However, Jaguar, still used it way later than any other car manufacturers, giving them wiring and electrical problems far after other people had figured this out. English cars couldn't use DOT fluid, because their seals couldn't stand it. That's all. It's a superior fluid, but for decades later, Jaguars had problems with brakes seizeing and dragging due to fluid boil, simply because they couldn't use DOT instead of mineral oil. Even the germans were quick to switch over, but the English, nope.
Welcome to the 21st century. Nobody uses natural rubber anymore (except for hutchinson greenlite tubes) and thus, everybody COULD use DOT fluid if they wanted to. It's all vulcanized and silicone/silica based rubber. So why don't they all use DOT? You be the judge. My guess is this. Cars don't use it. Motorcycles don't use it. Why? because their brakes get REALLY hot. Bike brakes don't get nearly as hot, so using mineral oils is acceptable. However, since cars and motorcycles don't use mineral oil, I can't buy it at the auto parts store. Instead, I have to buy little teensy bottles of it at my bike shop, for $5 a bottle, in order to make my shimano treehugger brakes or my maguras happy. Down at my auto parts store, I could get a whole quart of DOT 4 fluid for the same cost as that 2 ounce bottle of mineral oil. My theory, is that some companies don't want to use DOT fluid, because they realize it would be a lost opportunity to sell me the fluid I need (mineral oil) at outrageous prices.
See, I own maguras (oil) and hopes (DOT) and didn't pick either on the basis of the fluid that they use. When I work on my hope brakes, I simply wheel my bike outside when I'm done, and hose off the bike to make sure no fluid gets left behind on the painted surfaces of my bike. That's all the precaution you have to take. Is alcohol bad for the enviornment? I sure hope not. Alcohols are naturally occuring everwhere.
Pros of DOT: Readily available. (for car and motorcycle use, can stabilize water.)
Pros of M.O.: Don't have to worry about washing your bike off after bleeding.
Cons of DOT: Need to wash your bike off.
Cons of M.O.: Not readily available. (for car and moto, doesn't stabilize water.)
Suspected Pros and Cons: bicycle industry can make more money by selling you little bottles of red mineral oil than little bottles of DOT rated fluid.
I'm not likely to convert my maguras over to DOT anytime soon. Are the two fluids compatible with each other? Well, I doubt mixing them would produce any desireable effects. I've seen DOT 4 and DOT 5 fluids coagulate upon contact in the resivoir of a car's brake system when I actually added the wrong one. It's not something I'm going to experiment on in my bike brakes. However, if you could achieve a complete evacuation of all mineral oil, I think my Maguras would work just fine on DOT, and that Shimanos would as well. Probably true for using M.O. in a DOT system too. We don't really have to worry about fluid boiling on bikes.
As a side note, my grandfather's van boiled its fluid the other week. See, DOT fluid can only absorb so much water. He parks in a damp carport, and after 20 years, the origional fluid was just too wet, and caused his brakes to lock up and overheat on him. DOT isn't an infinte sink of water, so I still reccomend you bleed your car's brakes every few years.
I hope this shed some light on the subject for some people. As you can tell, I come from a rather automotive background on the subject. I really wish we, as a community of bikers, could be immune to listening to such types of marketing hype. If Shimano wants to save the enviorment, they need to think about people dumping used motor oil in street drains and groundwater contamination, not the two tablespoons of fluid in my bike's brakes that could remove paint or dry my hands.
I'm pretty sure my response should be saved as an 'opinion/historical article, containing significant fact' within the Disc brake FAQ sections.