Glycerine & water works. So does propylene glycol (similar to anti-freeze)& water. It will probably be more expensive and may not have the hang time of the petroleum based stuff. In the airshow biz we use Corvus or Canopus (13 wt). These are high-parafin slip-form oils. Some guys mix 50% jet-A, just to thin it and make it pump faster. There are some new oil combinations made specifically for smoke, but I've heard several guys say it made them sick.

I've found the most important thing is lots of volume and making sure you have very small particles coming from your injector nozzles. I run the system on my biplane (fullscale) at 50 PSI, with a nozzle I designed. I'm also pumping 3 quarts a minute. Works pretty good and doesn't make a mess of the airplane. (If your spreading oil all over your plane, your not efficiently using the oil.) I use pyro smoke for my sailplane wingtips, but it's expensive.

See at:
www.silentwingsairshows.com