There is no downside to running liquid in a pellet unit. It may smoke slightly less than with pellets but:
-it will not clog up
-if you tip the loco over while running, the liquid will not jam the piston, like hardened pellets will
-the air hole in the reservoir will not get closed
-you can use ANY type of smoke fluid - ANY type or brand.
-if you overfill it, the fluid will run out, but will not harden and jam everything up like pellets will