Cellulose fiber is certainly an acceptable alternative to DE ..... BUT .... it does have it's down sides. CF tends to breakdown on exposure to high chlorine levels (even when CYA is present to moderate HOCl levels) and so it ought to be backwashed much more frequently than DE or else you will get a gooey mess inside your filter. Many DE filter owners who have tried to use CF as an alternative find it to be messy and makes it harder to backwash and clean DE grids and cartridges. Also, once it starts to breakdown from chlorine exposure, you will get slightly higher FC demand and it's filtration performance will degrade. The process of using it in a sand filter should be the same as with DE BUT I would highly recommend backwashing it more frequently and not leaving it in as you would DE.
Quite simply, CF is inferior to DE as a filtration media.
Now, one also balances the positive aspects of DE with it's downsides as well. There are many municipalities that ban DE filters outright. Other municipal codes will often require the use of a trap on the backwash line to capture spent DE so it is not discharged into the environment or city sewer systems. And, yes, DE is an inhalation hazard BUT that side of it is often waaaaaaaay overblown as there is almost no risk associated with using it properly in an outdoor environment. Many people that cite the respiratory risks forget to mention that all of OSHA and IHS codes are designed for industrial use and production of DE, in other words, confined indoor spaces where exposure levels are orders of magnitude higher and properly ventilated areas must be engineered and maintained. Even though municipalities will restrict environmental discharge, there really is no danger in discharging it onto your property. Depending on where you discharge it, it will simply incorporate with the soil. There is no risk to vegetation but there is a side benefit - ants, termites, beetles, etc, all hate DE as it mechanically abrades away the waxy coating on their exoskeletons and causes them to die by dehydration. This is why in an area where DE is discharged you'll almost never find ant hills.