One of the problems with using teflon tape is this that you might get away with no issues the first time you put something together but what about the next time? If you unscrew a NPT fitting and a piece of that teflon tape remains in the female or it falls into the female fitting unnoticed, then that piece could be pushed into the oil stream. From there, it could get lodged in the holding valve and create havoc there.
I don't disagree that it can be used successfully but to me, it just isn't worth the risk. If I never use teflon tape on a hydraulic system, then I never have to worry about chunks of it ending up in the system should I have to take something apart, such as changing a blown hose. You only have to have this happen to you one time and then you will never use tape again.