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Great post on this I was just reading!
Dust baths, as dirty as they look, help them clean themselves. It's particularly effective against lice and mites. A dust bath can be as simple as a small space of dry, dusty dirt or you can build one with ingredients like you used.
FYI, should you ever find lice/mites on your chickens a simple and very effective treatment is to dust them with wood ash from your fireplace. Real wood ash, not just burned up newspapers. Put some ash in an old sock, tie a knot at the open end. Then take each chicken and dab them anywhere you see lice/mites, but usually especially around their vent.
It's a good practice to periodically inspect each chicken (perhaps once every month or two). I forget the particulars with symptoms of mites and lice, but I have found both around their vents. You will see little creepy crawlies moving around their vent. Then you can look up on BYC for photos if you want to learn exactly what critter they have. But in both of my cases, the wood ash dusting fixed it.
I'm not saying DE doesn't work, but I've never been particularly interested in it. I love natural remedies, but there is something about DE that just doesn't jive with me. It also doesn't work if it gets wet, so it won't work if your dust bathing area gets wet or if they ingest it. And you need to be sure to get food grade DE (can be hard to find except online) as the non-food grade stuff usually has toxic additives. DE also is not selective in the insects it kills...it will kill the beneficial ones as well as the ones you want to get rid of. Just my two cents.