I have used DE for a while now, and have found that it is very drying, and therefore irritating when applied to pets skin....... it bothered my dog more than the fleas and drove her completely nuts. And, it does seem to irritate lungs and eyes if it's in the air.
DE works very well on floors, carpets, etc.....I use a cool "squirter" kind of thing I found on line a few years ago when I bought the DE to apply it, which allows you to do a fine coating or large amounts, depending on how you want use it. I find less is best, as it really doesn't take much. I was thinking a powdered sugar/flour duster thing (I forget the actual name) would work well, too, but what's great about the squirter is that you can get under beds, into closets, etc. without having to move everything. After applying it to the carpet, I use a broom to gently work it in, being careful not to raise the dust, and leave it until I need to vacuum for other reasons...... it's killing fleas the whole time, so why vacuum it up?
On my pets, I have used cedar oil for the last few years, and it is working great! I buy a 20% formula from cedarcide.com, and spray it liberally and work it in the coat. It does not wash off in plain water, which is awesome if your dog likes to swim or go out in the rain, and is good for the coat, but doesn't leave it oily once it dries. I use less on the cats, so they don't ingest a lot when grooming. I also use it on myself and the kids to deter biting insects when outside, as it is completely non toxic.
My dog also used to get great relief from a bath with a mixture of vinegar and blue Dawn dish soap. Leave it on for 10 minutes, and you can see the dead fleas rise. I actually keep a bottle diluted with water handy for an emergency garden pesticide.
The same Cedarcide company sells a fogger that I might try in the attic playroom, as it has rough walls and floors, and I want a more thorough treatment without DE dust all over the place, which was a real mess the last time I treated that room.