I know its an old post but as I am working on Biofuel research thought it might be useful. First you cant just get old chip oil. Our (UK) government have now made it that you have to have a waste disposal licence to get it legally, and that can be many thousands of quid. Yes you can run a diesel on veg oil, diesels great exhibition engine ran on peanut oil. But if you live in a cold climate it gets thicker and could clog your engine if running just on veg oil problem is it has fatty acids that are more viscous than Diesel or biodiesel. The reason for pre heating tanks is to bring the ingnition point down, hot oil ignites better than cold oil and to thin it down to reduce the chance of clogging. Its really quite simple to make biodiesel it just involves some basic chemistry to crack the esters but private individuals may find it difficult to buy in bulk eg the caustic soda and ethanol required as part of the process. The set up costs are not cheap if you want to make in bulk as you need a large conical stainless steel tank with heat and stiring as well as some lab measuring stuff.
Now the engine bit. I am fairly happy that the basic 2.25 and 2.5 na engines will work on pure veg oil but wouldnt recommend it as the engineers have made changes since Rudolph invented it. If using unprocessed oil I would think a mix would be better. If you make or buy biodiesel I cant see a problem with running an older engine without all of the tech on it I ran my 2.25D series on biodiesel I made and when I get the chance will do so with my 2.5na 90. As for the TD5 or TDI engines, I cant get any concensus from any forums if long term use is going to damage the engine so as a scientist the default position is do no harm so Im not going to try it until there is more evidence its ok.
Final disclaimer, im a biologist not an engineer (other than the enforced engineering involved with owning Landrovers) so if YOU choose to use veg oil or biodiesel to run in your vehicle I am not responsible if things go pear shaped. This post is just for information and I hold no responsibility for your actions.
In all honesty the bio diesel thing has been done to death - around 2004 I and other Bio Diesel fans were posting heaps about bio on this forum and I was making 1000's of litres of the stuff - all the old stories and facts are on this forum to be read but it's just doing the usual cyclic process where something dies down and then we all forget about it then it all comes back again 10 years later. Some of what you say is correct but there are some things you need to be careful of.
On getting the oil - you can still get it - removing it as a service for money etc. your going to need waste transfer paperwork but if you have a contact that gives you the stuff then you are only taking something away from someone - is it waste? Partially used cooking oil is still usable cooking oil - maybe you are going to cook in it... There is nothing illegal about getting oil - if you start to do it on an industrial scale you may be into some bother, but who is actually going to give you any grief? The police are not looking for WVO smugglers and don't care. Of course if you take money for something, it all changes - like felling tree's! Also - there is some dubiety over what is 'waste' and what is not.
The set up costs do not need to be expensive at all, although I know "proper" plants can be £5000, at the peak I was processing 1000's of litres of stuff using nothing but gathered plumbing bits, pumps and tanks - I was also making it to a fully regulated spec, a properly titrated product with measured levels of methanol in the end product.
As you commented some engines are not fit for this stuff, I agree. It's the pumps not the engine though, they will all run on SVO/WVO and bio diesel but can the pumps deliver it? I would not run any of the Lucas CAV pumps (2.25-2.5) on veg oil - they don't last - I experimented with engines and pumps for years and the Lucas pumps are not robust enough and the oil is too heavy to set up the fine film of oil needed to lubricate these pumps. Bosch pumps on the 200/300tdi's do better but I would still not like to stick raw veg into the tank without some sort of other oils/fuel etc. to sort out the poor lubricity issue, preheating it would work too but it's a pain and people just want a fuel they can chuck in. It's not that engineers made changes to the engines, it's just the pumps are different, high speed rotatory injection pumps need good lube, have you ever had one apart? A dry plunger or transfer pump shaft for example will not go into the cylinder, wet it up with a tiny amount of diesel and it all slides in like a glove - that is the sort of tolerances we are talking here - these parts only survive because of the film of lubrication oil - i.e. diesel - extra sulphur is best!
I ran my 300tdi on the stuff and made some adjustments to the final fuel going into the tank to ensure good lubrication of the pump - I also measured the viscosity and batched it outside the vehicle so I knew what was going in was consistent - not stick 2 gallons of bio in and top it up with a gallon of diesel and try and keep a tally of what is in the tank!
I reckon the best engine for bio is actually the TD5 if the fuel is made to exacting specifications - which is the issue with most bio diesel! The TD5 has, like an injection pumped engine, some critical parts that need to be well lubricated - the injectors obviously are the most expensive moving part that needs lube in these engines - keep them happy and you are onto a winner - the tank pump should be fine, again if the bio is made well.
I stopped making it years ago - I think I have 20litres left over that I have held onto - my mileage didn't warrant the messing about anymore and my time became more important to me.
My advice would be for you to do a fair bit more research into the workings of the fuel delivery and injection systems - you will also need to look into the process of making bio to better understand it - to put what I have learned here in 14 years of bio making would take me days to type up - better is a discussion to talk through it all (welcome to talk on the phone if that helps) so if you have a keen interest and want to make this stuff I am happy to help you.
I think it is safe to say that those who are involved in bio diesel know how to go about it and what they are doing - it looks like you want to get into it, so if it was me, starting fresh, I would probably ask the question then sit back and wait to be told what you need to know.