Ya this can be used for oil in the gearbox or diff. On the Koso website you can buy cable extensions and also sump plugs in different threads for the gear box or diff drain plugs pre tapped 1/8th bsp but you can probably buy them else where or make your own.
It can also be used for water, you just need to cut the top hose and get an inline adaptor or if you have the e36 rad there's a boss in the side for the fan switch that you could reduce with a fitting to fit it there.

You should never underestimate the predictability of stupidity
M42 Supercharged 285bhp + M3 6speed box