I've heard of vegetable oils going rancid, but that usually comes with a qualification. The rancidity issues usually happen after the oil's been heated/cooked, which changes it's chemical properties and causes it to break down. The reason I used Canola oil on my Opinel, is because my mother's been maintaining a set of walnut-handled kitchen knives this way for the last 20 - 30 years. She still has them, and the handles have held up well. I've been paying close attention to the possibility of rancidity, with my Opinel. No issues thus far. I think the rancidity issue is minimized on an item like a kitchen knife, which gets washed freqently anyway (I hope), and the oil re-applied on a regular interval (maybe once a month or so). I say this with some confidence, as it directly applies to the aforementioned kitchen knives, which get used & washed almost daily, and re-oiled periodically. Reading more about the 'rancid' issues related to Canola oil, a few things keep coming up in common:
1. The 'rancid' nature applies to an off-putting or foul taste in food, in applications where it's used for COOKING (after it's been heated, as pointed out earlier).
2. Most commercially available Canola oils have been pre-processed (at high temps) to remove any odor or taste at room temperature, including after it's gone rancid (this explains much to me, as to why I don't smell any of it on my knife handles).
3. Universally, even rancid Canola oil isn't considered to be dangerous or toxic, especially when used for purposes other than the cooking/flavoring of food.
So, the issue of rancidity, in an application where it's used to moisturize & protect wood, seems to be largely moot.
I doubt the cedar oil would actually ruin anything (blades, skillet, etc.). But, in it's raw form, I still think it would impart a bitter taste on food, if used on food prep surfaces or cooking utensils. At the very least, I'd try it out on something 'expendable' first, and perhaps wash that item to see how easily the aroma/taste can be removed, if you don't like it.