The basic home brew Danish oil is 1/3 tung oil. 1/3 mineral spirits, 1/3 varnish.
So, yes varnish cut 50% would look pretty much like a Danish oil. Actually they all, oil finishes, look, as far as tone or color, like a varnish finish without the build.
Danish oil is be a pretty generic term that I would define as an oil finish containing resins that can be absorbed into the wood cells and is not meant to be nor would provide, due to it's high oil content, a good surface finish..
Danish oil's basic components is, after all, the same as a surface building varnish. Oil, carrier/thinner, resins. Cutting varnish 50% would certainly qualify the results as a Danish oil with the single exception that if you were to, for some unfathomable reason, apply enough coats, you could build it into a good surface varnish finish. It wouldn't make any sense to do so but......
By playing with the ratio's of the 1/3 formula you can vary the properties of your home brew Danish oil. While varnish cut 50% will, eventually, provide some more protection then some other possible combination of the ingredients I would venture to opine that, due to the low oil content, while it would cure quicker then a mix containing more oil, it would require more coats to obtain the same level of sheen that the basic 1/3 formula would. It is, after all, the oil not the resins that imparts the character to the wood.
As for the extra protection, I use a Danish oil over a straight BLO or tung oil for that very reason so I'm certainly can't quibble there. But, one must keep in mind, when weighing the benefits of an oil finish, that what ever level of protection a Danish oil gives over a non resin containing oil, it is still far inferior to a surface finish and I'd only recommend it on projects not receiving a lot of day to day handling/use of where the piece might be subject to standing liquids.
As for the ratio of the basic components, what ever floats you boat is fine with me. And, for the original poster, you have to consider the properties of the ingredients and experiment to find the mix you like, be it varnish cut 50%, a 1/3 mix, or some variation there of. In the long run they all pull into the same station.
Just a thought.