This is my opinion having used it for years and years:
DE is a useful product when used for its forte', and not used a miracle cure all. It should be freshwater human grade only - never pool or garden grade. Only good enough to be consumed by humans.
DE is a dust. All dusts are harmful to poultry and humans and other animals if inhaled. DE because of its nature (a fossil ground into powder) is a little more sharp. For that reason, I never apply it to the bird because they stick their faces in their feathers to groom. (And for other reasons listed below). I feel more confident in permethrin dust on the poultry as it has a different weight and sticks to them better, and even then I really ruffle the feathers to get the loose dust to fall.
Always wear a dust mask (with any powder) and remove birds from the coop when applying. Use under the bedding, put the bedding back on top. Use in the bedding, but stir in well. Use in their dust bathing area, but stir in very well.
I've used it as a worm control method. It will NOT prevent worms. Not even wormers will. It possibly reduces the number of larvae that are passed and thus possible reduces the number of worms overall available in the environment (when used in bedding and dust baths as well). You should never see it, and it should be used at 2% of the total weight of the food or less.
You should still worm twice a year for prevention. It may help keep you from having to worm five times a year, or worm because of an infestation.
As for parasites, it should NOT be used to treat an infestation. For that, you should use permethrin dusts on the bird,under the bedding, pretty much every way DE was describe above except add to that using on the bird. (Wear a dust mask, protect their nostrils/eyes/mouth when applying). You must repeat in 7 days with any mite/lice treatment. THEN use DE to keep numbers down. But know that wild birds can bring in mites and lice in a day - they hatch that quickly. So check your birds no less than monthly for both lice and mites (at night when mites feed onthe birds).
If you understand the strengths of DE and use accordingly, I feel it can be of great benefit to a flock. I highly dislike seeing DE touted as a worm treatment and a parasite treatment. That's taking a wonderful product and putting expectations on it that cannot be fulfilled, possibly turning people off of a very useful product that is more natural and I feel makes a different in a barnyard.
It's not superman, but it's a good hard worker if used correctly.
IMHO
Nathalie