I use choji oil (very light mineral oil with a hint of clove) a lot of times on my kukris (both blades and handles). Never had any ill affects from it, and the smell is great (IMO).
When I first started with blades I didn't know anything about them, so I ended up using 3 in 1 oil. As I progressed in knowledge I ended up experimenting with different oils and such. In the end I decided mineral oil worked the best. (as many told me it would

) Then I got a katana and a cleaning kit with it and in it was CHOJI OIL.
Choji oil is the way to go when it comes to protecting your blade. As Skyler said - it is mineral oil with a little clove oil. I know a lot of people ask "Why cloves?" and a lot of people will answer with various things like: "Because it pulls stains from the metal", "Because it helps the oil adhere to the metal easier", "Because it's magic", etc. To be completely honest, it's just to help differentiate it between regular mineral oil and choji oil. Basically, from what I understand, mineral oil and choji oil (which was used almost exclusively on blades) were kept side-by-side in a home. When a person needed mineral oil, for whatever purpose, they could simply smell them and tell which was which.
You can buy choji oil online or, if you live in a community active with martial artists, from a popular dojo. (Most serious dojo have bottles, but they're for in-house use only) If you buy it online try to buy a little bottle. You can always buy more! DO NOT BUY A GALLON SIZE BOTTLE! YOU WILL NEVER USE IT ALL! YOU WILL PASS IT DOWN TO YOUR CHILDREN'S CHILDREN! Seriously. Those are for dojo. Some people will buy those and actually go through them, but they're just wasting it. When you clean with choji oil you only need about three drops or so from a standard eye-dropper. Three drops is usually enough to coat both sides of my katana and then some.
Now my khuk is a different matter. To get all of the gunk off of it I put a couple of drops on a piece of cotton gun paper and scrub it until it's shiny again. Then I wipe it down, then coat it in uchiko (powdered limestone used to clean up any excess oil (and some argue it's also used to micro-polish the yakiba (skin)) then I put a light coat of oil on it. All in all, 6 or 7 drops for both sides.
Well, I kind of got side-tracked there... For those of us saving up for our khuk's next little brother or sister

you can make your own choji oil. Go to the pharmacy and buy a regular bottle of light mineral oil and a small bottle of clove oil. You may also wish to buy an eye dropper. This will be much cheaper than buying a bottle online (I'm talking like 60 dollars cheaper) and you'll have more than you should ever need.
Choji oil is essentially 99% mineral oil and 1% clove oil. Clove oil is bad for your blade. However, you do not need to get the exact measurements right. Just put a small drop of clove oil into your bottle of mineral oil and shake it up, then smell. The smell should be subtle (I like mine strong), but noticable enough that you don't have to search for it. Adjust until it's got a good smell, but don't put too much in.
Also, though I took a long time getting to it, I have never had a problem with choji oil and leather. Choji oil has been used for hundreds of years on priceless nihonto (authentic japanese swords) with excellent results. It doesn't gunk up your saya (sheath), it doesn't run off the blade, it keeps stains from setting in, stops rust (obviously), etc.)
I'm I got something wrong.

Feel free to edit and correct me guys. I'm still learning also. ^^
Cheers,
Krimson Draegon