As far as the safety of PEG 400 goes I would not recommend drinking the stuff unless you intend on staying on the toilet for a couple of days. It is the stuff you drink the night before a colonoscopy. But instead of worrying about the safety to you, wouldn't it be better to worry about the safety to your processor?
PEG happens to be the ingredient that evaporates out of arctic silver in the first couple of days. I spent about twenty minutes on the phone earlier with Nevin and confirmed this fact. Any thermal compound composed primarily of PEG will evaporate off your processor in a day or so and leave you unprotected.
Also, if you read the research paper that is linked in the article, you would see that she found that if she used anything greater than 1.25% carbon black by volume performance decreases. If you just mix it until it is pasty, you will end up with something that will be worse than useless.
But wait, I am not done yet!
The emperor has no clothes!!!
If you read the article you should notice that she is comparing her compound to nickle (among other more exotic compounds that there is limited data for). Why would she compare it with nickle? Ever seen a heat sink made of nickle? No you haven't and the reason why is that nickle is worse than carbon as far as thermal conductivity. Heat sinks are made from either copper or alumminium because those are the cheapest metals that have any decent thermal properties at all.
Here is a link to a table of thermal conductivity of the various elements.
As you can see, carbon is a terrible choice for heat transfer. Yes nickle is worse but not by much. Silver and gold would be even better than copper but who is going to pay over $200 for two pounds of silver to cool a $75 processor?