I've seen this done before somewhere else and it was very viable for them, and better than air cooling. The trend probably died because people see it as weird. I do remember that in the setup I saw, the PSU was also in the oil (was cool to see it's fan slow down due to the viscosity) and they did not have any bubbles in the setup. Having bubbles though is probably like whether it is better to have positive or negative air pressure, but more so.
Bubbles could potentially move heat out of the oil more efficiently (would need to test this though, because I haven't a clue where the optimum size and speed would be) but they could also introduce impurities, which could then lead to a short. I doubt a short is likely to happen though, but with impurities comes the possibility.
I do agree with you that adding fans will help. Just like in a water cooling setup, you want the oil moving to pull heat away.
Just be careful and have fun with it. Don't be surprised if you see some components hitting higher temperatures than on air. The motherboard and RAM are probably going to be getting more heat from the CPU and GPU because of this, raising their temperatures, but the CPU and GPU should have lower temperatures, if the oil is flowing properly.
Edit to comment on Puck's post:
The problem is that mineral oil does not dissipate heat well.
Your system will boot up nice and cool, but as you leave it running and use it the temp will slowly climb higher and higher. Then, it takes ages to cool back down again.
Theoretically you can run a submerged pump to an external radiator to try to keep it cool, but I've never seen that done.
Very true, though there should be a maximum temperature the system would reach, as the input and output equalizes. That's something oil movement can help with, and definitely a radiator.
Processor: AMD Phenom II 720 BE, 4-core, @3.40GHz (17.0x200)
Cooling: Corsair H50 with Push-pull Akasa 120mm fans
Motherboard: ASUS M4A785TD-V EVO 785G
GPU: EVGA GTX 570 1280 MB
PhysX: MSI GTS 250 1GB
RAM: Corsair Dominator 2x2 GB and G.Skill Ripjaws 2x4 GB (12 GB total) @ 1600MHZ 9-10-9-28
PSU: Corsair 750TX
OS: Windows 7- Home Premium 64-bit
Needs more tigers.
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