From this paper: "Hepatic cholesterol accumulation is driven by a deeply deranged cellular cholesterol homeostasis, characterized by elevated cholesterol synthesis and uptake from circulating lipoproteins and by a reduced cholesterol excretion."
This is what happens when simple fatty liver becomes NASH, with progression of fibrosis and cirrhosis.
I commented at the time "elevated cholesterol synthesis = high PUFA diet lowering serum cholesterol and upregulating LDL receptors (lower serum cholesterol= more intracellular cholesterol), also excess sugars > TG especially with choline deficiency.
Reduced cholesterol excretion = low esterification due to deficiency of taurine, glycine, also Mg+, esp. with choline deficiency."
The first part of that is based on the mechanical function of cholesterol as a membrane-stabilising agent . Extra PUFA in cell membranes demands extra cholesterol be produced by, and much retained by, the liver. Serum cholesterol may go down (the supposed "good" result), but the NASH example shows that serum cholesterol readings are in fact a very weak and misleading indicator of intracellular disease processes involving cholesterol.
You can have "low cholesterol" while accumulating cholesterol is killing you in a much more sure and certain way than via any "lipid hypothesis" mechanism, and this might also apply to cells outside the liver in the presence of fatty liver disease.
(ew - soy oil)
(Picture borrowed from Suppversity blog and based on Hashimoto et al. 2013)
The other interesting thing was the generally beneficial picture seen with fish-oil feeding. Combined with alcohol, fish oil is deadly to the liver. Granted the fish oil effects were extreme, reflecting the enormous dosage, and perhaps undesirable in other ways, such as depressed immunity, but fish oil wasn't causing fatty liver or predisposing to NASH in this model.
It's all about omega 6. And, I suspect, about linoleate, not arachidonic acid.
This was 45% energy from soy oil, which (edit) was about 50% linoleate (a bottle I saw today was 58% PUFA). If your hepatic cholesterol is increased, and you also eat foods high in cholesterol, the liver isn't going to cope with that extra cholesterol, is it? It's already struggling with its own production.
So the very "food" you consume to help with your imagined cholesterol problem can be causing a very real and lethal cholesterol problem. Unless that food is fish. Or nuts, for a different, complicated and somewhat obscure reason, probably not much to do with linoleate.