DE is and has been popular in small ruminants (alpacas, goats, sheep) for some time, as well as in birds and it does work. Some owners just sprinkle it over the manure piles and others feed it directly to the animals.
However, while it is indeed finely ground and feels soft, feeding studies are beginning to show the long term affects of the abrasiveness is causing problems in the various stomach chambers in ruminants.
Not sure how that would affect horses long term, but I am guess not very well.
I do have it around the farm, but I use in the areas that the chickens like to take dust baths in, or to dust the chicken coop as it will kill external mites.
DE is marketed to be given to birds, dogs, and all manner of farm and companion animals so I wouldn't worry about other animals picking through the manure/manure piles.