ya i don't buy that you can just fill it with oil and be done with like a lot of those videos do, you definitely need a pump and radiator to give it some cooling properties. after long term use/gaming it would heat up the oil enough that you really need movement and alternate cooling or else it will fry everything, literally.
also, with the cpu you just put on the heatsink but not the fan?? i guess? or should you keep the fan on it to keep the movement of oil throughout the heatsink....ya i guess that would be best, but also my first thought was you're going to damage the fans since they cannot run at their RPM.
Well, it will slowly dissipate the heat as the oil transfers it towards the outside of the casing. But yeah, it would be more effective if the oil is cycled around.
I don't think there should be any long term effects. Oil is just like really dense air. Yes, it will probably damage your fans because of the huge resistance oil will create.
What would be even cooler is to build the casing out of metal and cover it completely with heatsinks. Then have several pumps cycling the oil. Heat will be transferred to the heatsinks thus dissipating the heat continuously. Plus, it will look awesome! Like a big spikey computer case.

















