Well in response to the thread Bill linked to above, the people there seem a little bit off on the idea. The poster of that thread is talking about cooling a radiator with another larger radiator, when he really should just be using the large radiator directly in the first loop. But here, where its easier to pump water outside to a large radiator and back than expensive mineral oil, it's worth the possible performance loss to use oil just where its needed to be non conductive and water in the rest.
Akkerkid, when you finish this project you should do a write up with pictures of building and testing your cooler. If you're interested, maybe Joe would publish it here.