G'day Steve.
I've used both and my money goes to the oil based. My opinion is due to:
1. Oil based filtration is more effective (but can't remember the study that proved it )
2. Cleaning an AFM is a piece of cake and would only be necessary if you dipped you panel filter in olive oil. The K&N filters are soaked but in my experience the amount of oil the separates from the filter and goes to the AFM is negligible.
Just to confirm, the oil will not damage the AFM. Worst case scenario is there would be an oil build-up on the hotwire sensor (the part in the airflow) which may interfere with the AFM reading -> erratic voltage output to the ECU. To fix, take out the AFM, spray with brakekleen, refit, voila. Takes maybe 10mins every six months.
Cheers
Mark