Not trying to turn this into a "what's the best oil" debate, but at least according to the guys at Hydratech (hydroboost retrofit company) you should never use ATF in your power steering system. I know we all got away with doing it decades ago.. but that didn't mean we were right. I looked into it when I was flushing/filling the hydroboost setup while building my 3500HD, and decided against ATF in hopes of prolonging the life of the already-abused system.
Mind you I'm no expert on the subject, so I figured erring on the side of caution was the wise move. Here's the info copied verbatim from their site (emphasis mine):
"We highly recommend the use of Redline, Royal Purple, or Lubegard power steering fluids. After 25 years of working with hydroboost systems, we know what works best based upon endless testing and always working with our customers. Using a poor-quality PS fluid results in erratic system behavior, noisy operation, along with a reduced lifespan. Note that we clearly state in our instructions to NEVER use automatic transmission fluid (ATF) in your Hydratech installation. Why? ATF is not interchangeable with power steering fluid because ATF does not have the anti-wear protection or shear stability needed. Power steering fluid is specifically designed to work in a MUCH higher-pressure range. The typical automatic transmission will never see more than 350 PSI, while a power steering system may produce up to 1600 PSI of pressure. When transmission fluid is pressurized quickly to 1600 PSI, then the fluid quickly reverts back to normal air pressure as it moves through the system, ATF cannot handle it resulting in aeration and foaming - the enemy of high-pressure hydraulic systems. Transmission fluid also has a completely different additive package in it that is designed to provide just enough lubrication to the bushings and bearings, but has less overall lubricity as the clutches inside of a transmission need to be able to bite when engaged without slippage. ATF also has special detergents and seal conditioning additives that are not proper for use in a hydroboost unit. If the seals are excessively softened by ATF, they can be damaged very rapidly. Can you imagine draining and refilling your automatic transmission with power steering fluid? It would just about immediately start slipping as power steering fluid is, well, vastly slipperier, not allowing the clutch packs to apply without slippage. On the flip side, power steering pumps, steering gears of all types, and hydroboost brake assist units operate under extreme load and pressure conditions, requiring a fluid that provides the maximum amount of extreme pressure additives - the more lubricity, the slipperier the fluid is, the better!"
Richard