The Fuel Density Compensator has nothing to do with the engine's ability to burn alternate fuels. It only adjusts the amount of fuel delivered to keep the engine power output constant regardless of heating value of the fuel. (The FDC is calibrated for, diesel (1 and 2), gasoline and kerosene type fuels)
Gasoline has a lower heating value than diesel and causes the FDC to increase the fuel delivery.
The FDC actually works against veggie oil/biodiesel, which is more viscous, but has a lower heating value.
Veggie oil/biodiesel is not a specified fuel for the engine, but it runs just fine on it. Bypassing the FDC would then be an advantage in the interest of keeping a more constant power output. However, bio-fuels contain more oxygen than petro diesel and will therefor make up for some of the error introduced by the FDC.