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sdeeter, that is why I recommended a bypass filter like the MG as it is submicronic, that is, less than 1 micron. A 10 micron oil filter (which is probably 10 microns nominal) is about the same as a good full flow engine oil filter. A MG, Frantz, etc. will work much better in this application.
Cummins does not state, but RECOMENDS blends up to 5% biodiesel. They do not impose limits and they do allow 100 biodiesel. The only liability is if you have a failure directly related to biodeisel it MAY not be covered under warranty. I know of a guy who was running 100% bio and plugged a catalytic muffler and Cummins warrantied that. This is for all Cummins engines, not just mechanical engines. I think I have a digital copy of the service bulletin from Cummins if you'd like it. Besides, the engine in the Liberty is built by an Italian company that is a subsidiary of Detroit Diesel which is owned by Daimler and has absolutely no ties with Cummins that I am aware of.
All oils, whether they are synthetic or not, will burn. It is just as matter of what temperature is necessary to make an oil burn. The combustion temperatures on a diesel are quite high and most oil will burn just fine. In fact, a CAT at work with a synthetic test oil burn the oil so well it lifted the head when it started burning engine oil that was mixed with intake air from a bad turbo oil seal. Keep the mixture rate of used oil with the fuel will help ensure that you get a good burn. Your point about high flash point should be remembered though, I still recommend that if you want to burn waste oil with your diesel that you make sure to put a good load on the engine and run it at full load every so often to keep the injector tips, etc. free of carbon build up.