You might find something worthwhile as a cutting lubricant/coolant in the blogs/forums, personal websites.. where home shop EDM machines are being used. I realize that the two types of metalworking are very different, but those guys also need to use non-or-low flammability fluids. The vapor/smoke of some types of otherwise-safe fluids becomes very flammable once the fluids are heated, to the point of being explosive-type reactions if ignited.
BTW, the aerosol cooking sprays that I've used contain alcohols, although the mists of lots of compounds will burn rapidly.. squeezing a piece of orange skin near a flame (at your own risk) will show what's in the skin.
An option/machine modification that may prove worthwhile, would be to duct a fresh air supply to the motor housing/case for cooling the motor, and avoiding getting any mists inside it. A small Dayton squirrel cage blower (similar to the heatgun-sized units) would likely supply a more than adequate flow of clean air. A light-duty flexible duct could provide the necessary ducting without interfering with the drive power for the Z axis motor. Blowers provide air pressures that typical fans don't.. and the air over the motor only needs to be slightly above zero pressure (just a little more than the make-up of the motor's fan displacement).
An alternative spindle motor would be an air motor.. they're capable of very high speeds, but then the mini-mill becomes driven by the big air compressor motor.. but since you may be considering compressed air for cooling vortexes and/or chip evacuation, you'll already be dependent upon compressed air.
I don't know what ATF you were pricing, but for metal cutting purposes, the inexpensive no-brand ATF or power steering fluids at dollar-type stores would be adequate, IMO. Mineral/hydraulic oils generally cover a very wide range of uses.
There is a lot of misuse of terms like water-based.. just because a product is water soluble doesn't mean it contains water (yes, adding water probably makes it flow more easily). So, using some of the newer machine lubricants without adding water may be entirely possible.