Flax oil or Linseed oil is known to spontaneously combust. That's the oil binder in paints, the old fashioned wood conditioner oil. Not sure about toxicity as far as eating massive amounts. I would consider fire in a horse barn pretty toxic. It's oily rags that have been the villain in all the documented cases so maybe as a feed additive it's off the hook. I use it occasionally on old furniture and tool handles. Makes me nervous enough so that I use a cotton rag and bury the thing out back when I'm done.
Dr. Valentine knows her drafts. I wouldn't be afraid of anything she says.
A coffee bean grinder should work slick on the flax seeds. I've been using one for 20 yrs for my coffee. You get so you can control the particle size easily. In the case of flax I'd just push down and let it rip.
I do know that much oil is going to make feed pans knarly real quick. Get a couple extra so you can switch them out and wash them good.
I've never had to deal with a boarding situation. I imagine what the help will tolerate varies widely. I think I would try getting a 5 gallon pail with a tight lid and grinding the flax ahead of time and putting each meal ration in an individual plastic bag. Plastic bags and tight bucket lid should help with a lot of the degradation of it as far as oxidation goes. Also tight lid - no air- no air - no fire. The fire thing is probably just pure paranoia on my part but my house is 265 yrs old. It would go poof!
The cheap big store brand jugs of cooking oil here are soy oil. The label does sometimes have the caveat that it could contain sunflower, canola, safflower, corn at times. I imagine whatever crop of oilseed is cheaper at the time goes. Not at all a problem as far as a feed additive goes. I've used it from time to time with some of the skinny horses I've brought home. I've never used more than a measuring cup full at a time though.
I'm definitely interested in what the tests say and what you work out. Never know when another draft or muscle head stock horse might follow me home.