A dealer told a friend of mine that the "Engine Oil Life" % in the DIC is determined by how dirty the oil is. He said it "reads" the oil somehow. Is this true, or is it actually based on mileage? At what point should you change it? He told me at about 20% no matter how many miles. Is this thing just a gimmik or is it something worth paying attention to?

It does not sample the oil or measure its cleanliness/dirtiness. It makes a guess based on various parameters, including mileage and some others.

I use Shell Rotella Syn 5w-40 and change when the indicated remaining life is about 35-40%.

It's fairly accurate for run of the mill trucks. I think as long as you don't go crazy on mods, it will give you a good indicator of when to change the oil. For the record it's baseline milage is 10,000 which matches GM's recommended service interval.

There is an oil forum where guys talk oil all day long and they say it's a good decent product. http://theoildrop.server101.com/cgi/ultimatebb.cgi?

k1xv is correct - the system does not check the oil for contaminants. There are no sensors installed for this.

The oil life percentage is based on miles traveled since reset.

A few other parameters (engine temp, etc) are factored in. If these parameters never reach abnormal levels, then the 10,000 mile change interval is not deviated from.

Here's some reading on that subject.

http://www.dieselplace.com/forum/showthread.php?t=565