yep that works, I put wood ash around their night house, and DE on the bottom of their beds. If you do this all the time you will eventually get rid of all mites, fleas and lice.
I always dust new chickens with DE before I put them in with my other girls, just in case they are carrying mites, lice or fleas.
Animals know whats good for them, I have wild bronze wing doves that practically live in my chickens pen and the garden. They like to use the same dust baths as the chickens, so it must be good for them. They are the local freeloaders, but they are so pretty I don't really mind :)