Short answer - not really. Fat is an essential component in any cake, and milk just isn't very fatty - about 5% for whole milk. You can make cakes with milk, but they require totally different recipes: you can't simply substitute milk for oil.
Bear in mind that you're distributing the cup of oil throughout a whole cake, so that any one slice will only have a fraction of the oil. I assume you'll also be sharing the cake with others, so you'll be 'spreading the calories' somewhat.
You should be using a neutral oil like canola (rapeseed) oil anyway, as it has a relatively mild flavour. A popular alternative these days is to substitute all but a couple of tablespoons of the oil with apple sauce (really), but this can be hit and miss and doesn't work with all recipes - it usually works best with things like quick breads (scones etc).
Of course, there's also the point that cakes are supposed to be a treat, and they'd be less of a treat without the fat, in which case why bother? If you want to be healthy, make a salad. If you want a treat, make a cake and don't worry about the contents too much.
See Food Timeline, which explains that historically, the closet thing to cake was more an enriched, sweetened bread, enhanced with honey, perhaps with fruits or nuts added. They would have been closer to what we think of as fruitcake.
According to them, the precursors to modern cakes came about due to more reliable ovens, and the availability of refined sugar. They were baked in a ring or hoop, and covered with a boiled sugar icing.
Truly modern cakes did not emerge until baking powder became available:
It was not until the middle of the 19th century that cake as we know
it today (made with extra refined white flour and baking powder
instead of yeast) arrived on the scene. A brief history of baking
powder. The Cassell's New Universal Cookery Book [London, 1894]
contains a recipe for layer cake, American (p. 1031). Butter-cream
frostings (using butter, cream, confectioners [powdered] sugar and
flavorings) began replacing traditional boiled icings in first few
decades 20th century. In France, Antonin Careme [1784-1833] is
considered THE premier historic chef of the modern pastry/cake world.
You will find references to him in French culinary history books.
I was not able to easily find historical recipe for very old precursors to cakes.
Still, the archive of The Old Foodie includes a recipe it indicates is circa 1769, which is in the refined sugar era, representing one of the early transitional recipes:
Gateaux d’Amandes. Almond Cake.
Take half a Pound of Flour, half a
Pound of pounded sweet Almonds, and five or six bitter with it, half a
Pound of Sugar, six Eggs, and work it well all together; form it into
a Cake; bake it on a sheet of Paper, well buttered; when cold, glaze
it with a white Sugar-glaze: another Method for the same Sorts of
Cakes; bake it in a Mould, or Baking-hoop; pound a Pound of sweet
Almonds very fine, and one Dozen of bitter ditto, putting Whites of
Eggs, to hinder them from turning to Oil; then put to it half a Pound
of fine Sugar-powder by Degrees, two whole Eggs, Lemon-peel, finely
chopped or rasped; when this is properly mixed, add eight Eggs, the
Yolks and Whites first beat up separately; stir it, and mix it all
properly; and pour it in the Mould, to bake about an Hour: serve in
its natural Colour.
Best Answer
Bacon works well in sweet dishes because it is quite sweet itself. Why not try a sweet-cured bacon in a subtly maple-flavoured cake?
You can really boost the sweetness of the bacon by putting it in a very low oven for long time. It pretty much crystallises.