I've been experimenting with Coconut oil as a simple moisturizer for hands & skin, here in the ever-dry desert southwest; my hands are always 'itching' for some moisture. I've found it can indeed go rancid, if only by the smell anyway. After using a bit of it on my face in the morning (with some in the moustache, directly below my nostrils), it gets to smelling a bit 'off' by the evening, and I feel compelled to wash it off.
Any plant or animal-based sugars, oils or fats have the possibility of going rancid to some degree, when they oxidize. The only question is whether it's enough of a problem to avoid it's use for a knife blade; in some cases, it may not be a big deal for short-term use, in the absense of a better lube or protectant. I wouldn't use them for pivots, as they'll all gum up eventually; I've noticed this with vegetable oil, olive oil and coconut oil, so far. They all end up a bit 'sticky', when left exposed to the air for some time. I suspect part of the claims to it not going rancid may just be dependent on storing it in a relatively 'full' sealed container (as would be the norm in the kitchen), minimizing exposure to the air. If stored as such, it will stay relatively fresh for a longer time, before use in cooking.
David