Based on shulchan aruch on the fear that Goyim might use milk from a non-kosher animal also according to chasidus cholov nochri polutes your mind & your heart.
Most chareidim use strictly chlolov yisroel.
Only thing I make an exception is butter because butter can only be made from cow's milk.
My understanding is that it is permitted under the circumstances of the Shulhan Aruch (which bases it on the Gemarah). Probably a situation of a Safek Sfeka
Machonshilo-
The Talmudh Yerushalmi Avodha Zara 2:9 (Vilna 2: 8 ) gives two reasons why milk bought from a non-Jew was decreed to be asur:
a) giluy (i.e. a poisonous creature may have excreted venom into the milk if left uncovered);
b) the possible admixture of milk from a non-kosher animal.
The Talmudh Bavli AZ 35b gives only the latter reason.
The last Mishna of that 2nd chapter of AZ (39b) and both Talmudhim state that if the Jew can see the non-Jew milking - or even if the non-Jew thinks the Jew might be able to see him and therefore would not risk doing anything that he knows the Jew will not accept such as adding milk from a non-kosher animal - the milk is permitted. See Rambam's MT Maakhaloth Asuroth 3:15 (or 3:17). From all this we see plainly that if there is good reason to believe that the milk before us is in fact from a kosher animal, the milk is mutar. (Regarding giluy, almost no-one today is mahmir about giluy as venomous snakes and the like are not common in our homes today, as pointed out by almost all the Rishonim).
http://www.kashrut.org/forum/viewpost.asp?mid=51020&highlight= He says dairy is fine in Israel.
About the second part- for me irrelevant to a Halahic discussion.
Also if the Shulhan Aruch differs from the Talmudh if you have the exact source maybe share it.
