It sucks when you lose a patient. You're right, it's not always possible to know what's wrong and we try to do something and sometimes anything to see if it will work. There was obviously far more going on inside your chicken than any of us could have guessed.
I'm sorry we couldn't have a happy...
Oil is the best treatment for scaly leg mites, but if it turns into seborrheic dermatitis, then you would want to stop the oils and use a dandruff shampoo to treat this possible secondary issue as oils will make this dermatitis worse.
Perhaps you're onto something about the scaly mite treatment causing this skin issue. Using oils on leg mites could create this problem since oil makes it much worse.
Another thing you could try on her scaly lesions on her breast is coconut oil. It's a natural anti-fungal, and it will also condition her flaky skin and help it to heal.