" What is the role of phenol in lactophenol cotton blue?"
Phenol has two roles: 1) Along with lactic acid, it's a somewhat high refractive index index medium, which can help with specimen contrast, as well as acting as a clearing agent for the specimen itself. Lactoglycerol (lactic acid + glycerol) is a perfectly good substitute for this use; 2) Phenol also acts as a preservative for the specimen material - in many cases a certain percentage (say, 10%) in a lactoglycerol/phenol solution is acceptable for preservation.
In terms of "safe alternative", I'd say cotton blue in lactoglycerol is as safe as any analine dye, albeit, due to the concentration of lactic acid a it's a weak corrosive and potentially caustic if there's prolonged skin exposure. (By way of comparison, there are chemical skin peels on the market that some people use cosmetically with a similar lactic acid concentration.) But much safer than anything containing a high concentration of phenol, which really can be a serious chemical burn and toxicity hazard.
Congo red is an analogous acid dye with a similar affinity toward fungal and other cell walls and like cellulose or chitin structures, though it's typically prepared in aqueous solutions. It's perhaps the most commonly used general fungal dye and works quite well in series with KOH, but because it's metachromtic, would become a blue stain in a lactic acid based solution, and hence isn't generally used in such mixtures.
Which of these I use depends on whether lactoglycerol, KOH, H2O, or some other medium as my primary mounting medium, and that depends on whether I'm trying to break down certain structures or keep them intact, etc. For a typical squash mount, I'll use KOH and Congo red; but conidia on a trichomycete would be more amenable to a lactoglycerol-based solution, as would endophytes and mycorrhizal structures.
Lugol's iodine or Melzer's reagent (sadly very hard to get because of the near-impossibility of obtaining chloral hydrate for general lab use) are not substitutes for direct dyes like Cotton blue or Congo red, but are rather reagents that have color reactions with certain structures in certain species.
Yet another direct stain that can be useful is Phloxine, which is basic dye and cytoplasm rather than cell wall selective. (And, hence, not a substitute for the above mentioned direct stains.) Phloxine can be used in a conterstaining series with wall-selective dyes like Congo red, Evans blue, etc.
Generally phenol dissolve proteins. I am not very sure what it does in lactophenol cotten blue, but can speculate that it helps in retaining dye (cotton blue) in the fungal cell wall.
Cotton blue is the dye, lactic Acid is used for preserving fungal structures and phenol is used for destroying microorganisms that are not preserved by the acid lactid.
In resume, you can use a mix withouth phenol, but it would complicate the observation of the structures...
Crezyl blue/violet is also a good dye. It depends what kind of fungi you are observing. Melzer´s reagent and Lugol´s reagent are also relatively good for overall observing. If you specify what genera or groups of fungi you are working with I can recommend the best dye.
If you want to observe LBs (Lipid Bodies) in live paraphysis, then use CRB (Brillant Cresyl Blue 1% in water); CRB don't kill the cells. If you only want to see spore ornamentation: CRB or lactophenol cotton blue (it kills the cells).
" What is the role of phenol in lactophenol cotton blue?"
Phenol has two roles: 1) Along with lactic acid, it's a somewhat high refractive index index medium, which can help with specimen contrast, as well as acting as a clearing agent for the specimen itself. Lactoglycerol (lactic acid + glycerol) is a perfectly good substitute for this use; 2) Phenol also acts as a preservative for the specimen material - in many cases a certain percentage (say, 10%) in a lactoglycerol/phenol solution is acceptable for preservation.
In terms of "safe alternative", I'd say cotton blue in lactoglycerol is as safe as any analine dye, albeit, due to the concentration of lactic acid a it's a weak corrosive and potentially caustic if there's prolonged skin exposure. (By way of comparison, there are chemical skin peels on the market that some people use cosmetically with a similar lactic acid concentration.) But much safer than anything containing a high concentration of phenol, which really can be a serious chemical burn and toxicity hazard.
Congo red is an analogous acid dye with a similar affinity toward fungal and other cell walls and like cellulose or chitin structures, though it's typically prepared in aqueous solutions. It's perhaps the most commonly used general fungal dye and works quite well in series with KOH, but because it's metachromtic, would become a blue stain in a lactic acid based solution, and hence isn't generally used in such mixtures.
Which of these I use depends on whether lactoglycerol, KOH, H2O, or some other medium as my primary mounting medium, and that depends on whether I'm trying to break down certain structures or keep them intact, etc. For a typical squash mount, I'll use KOH and Congo red; but conidia on a trichomycete would be more amenable to a lactoglycerol-based solution, as would endophytes and mycorrhizal structures.
Lugol's iodine or Melzer's reagent (sadly very hard to get because of the near-impossibility of obtaining chloral hydrate for general lab use) are not substitutes for direct dyes like Cotton blue or Congo red, but are rather reagents that have color reactions with certain structures in certain species.
Yet another direct stain that can be useful is Phloxine, which is basic dye and cytoplasm rather than cell wall selective. (And, hence, not a substitute for the above mentioned direct stains.) Phloxine can be used in a conterstaining series with wall-selective dyes like Congo red, Evans blue, etc.
Siva Prasad Reddy Basava, Srijan Ambati, Kandati Jithendra, N. Premanadham, P. Sreenivasulu Reddy and Charan Kumar Mannepuli. 2016. Efficacy of Iodine-Glycerol versus Lactophenol Cotton Blue for Identification of Fungal Elements in the Clinical Laboratory. Int.J.Curr.Microbiol.App.Sci. 5(11): 536-541. doi: http://dx.doi.org/10.20546/ijcmas.2016.511.063