The new Backyard Poultry magazine had a letter in it listing some possible disadvantages, such as concerns it causes lung cancer and takes away hydration and oil based supplements. I believe there was mention that people have a tendency to mistakenly think "natural" automatically means "safe," and I tend to agree with that assessment. I don't remember any details, or whether it was an article, a letter, well researched or drawn from personal experience. If you happen to notice the magazine anywhere take a look and see if you can find it.
I don't use DE for two main reasons . . . I don't think it kills internal parasites at all, for one thing, because I know the mechanism by which it's supposed to kill bugs, and it just wouldn't work on an internal parasite. People will argue that point with me, citing personal experience and whatnot, but quite frankly when someone believes the garlic they give their dogs dissuades fleas there is no amount of flea infestations on garlicky dogs I can show them that would convince them otherwise, and I got tired of trying. Some DE enthusiasts who feed their birds the stuff are much the same, I imagine.
The reason I don't sprinkle my coops with it is because . . . well, this may sound silly, but I like bugs, and I don't like the idea of sprinkling something around that could kill bugs indiscriminately. I also use the contents of my coops in my garden eventually, and I can't help but think the DE would not be kind to my beneficial bugs that could potentially visit my garden's soil. I don't have any research to back up this last bit of reasoning at all, so if I'm wrong I'd love to know it. My SO gets fed up with me for denying his every attempt to do anything that MAY kill a bug . . . I imagine I'll change my tune if we ever get a good termite infestation, but for now I'm content.