Cats' levers apparently can't break down essential oils very easily, so to be on the safe side they should be avoided http://www.cybercanine.com/cat.htm says even inhaling them is a problem.
I have been using essential oils for about 18years. I have a 16year old cat, that was growing up through my early aromatherapy obsession, oils in burner most of the time, and most of that was in a small flat, so he was exposed to essential oils quite a bit. I never applied any on his skin, but he certainly inhaled a lot of them. I'm in a house now, and have my treatment room in the house. I get exposed enough to the oils in my treatment room that I don't use them through the rest of the house, but he still tries to get in the treatment room if he can, so he doesn't avoid them (there are generally 2 closed doors between him and the treatment room, but he is a cat and the minute they can get in somewhere they shouldn't.....) The vet says he is in good condition for his age. So in my experience, a cat inhaling essential oils doesn't seem to be that much of a concern. BUT I do think the liver breaking down essential oil problem probably applies for oils applied directly on the cat, they do metabolise things quite differently to us.