WD40 is a pretty good solvent
and it is also a lubricant (basically it is a mixture of Stoddard solvent and mineral oil). Yes it does displace water, but so do all lubricants to a degree (they are all hydrophobic), its a good thing. If there are no rubber/synthetic seals/materials that could be adversely affected by the solvent component (light distillate aliphatic hydrocarbon) of WD40, I imagine it would be pretty good at stripping out all the old grease and crap and leaving a think veneer of lubricating oil (simply mineral oil). However, the lubricant it leaves behind may not have the correct viscosity or additives to prevent wear or to provide optimum performance for the bearing. So I could see WD40 being used to clean a reel and then once wiped clean and air dried to allow the solvent component of WD40 to flash off, applying the proper lubricant would probably work very well.
This is what is in WD40:
http://www.wired.com/science/discoveries/magazine/17-05/st_whatsinsideCaveat: I do not know the construction of the reels well enough to know if there are any materials that would be adversely affected by a solvent like WD40. I assume being bushing there are no bearing seals to f$ck up so all should be good, but I stand to be corrected.