I use food grade DE for 8 years now, mixed with sand. Ad about 5% in volume to the sand under the bedding in the nest-boxes and to their favourite dry sand-bath spot. My chickens never had any respiratory problems.
Besides that I ad water to DE to use is as a paint in the coop (wood with cracks). Its sticks to the walls, roost and joints, and dries quickly. Its easy to see if it wears off and I need to reapply it on the roosts quite often.
In the first year I didn’t use DE and got red mites in the coop. After that I used DE and the red mites stayed away for 8 years while we have wild song birds coming in the run every day. Some even get in the coop.
Red mites infestations are a burden for all chicken keepers in the Netherlands. DE is used by factory farmers too because permethrin and other poisons are not allowed anymore for chickens that produce eggs and meat.
I got a bit sloppy in applying and controlling. The red mites settled in this spring when I had chicks and new broodies in the old small coop and the nest boxes. It wasn’t too bad and under control after about 3 weeks. Cleaning twice, more DE and herbal supplements in the feed and water. Only used permetrin on a determined broody who was occupying the nestbox and stopped laying eggs.
My chickens never had worms, feather lice, scaly leg mites, etc. Not sure what the effect was of using the DE, but I think many people regularly have problems with parasites. And I didn’t.
I dear to say that DE is not a perfect in preventing an infestation, but I’m convinced it helpt me over the years.