Hi,
Yes, it is not possible to enter Brazil just with your DNI, unless you are a
citizen of a Mercosur country. I've been going to Brazil at least once a year since 2007. I have a DNI, and as a US citizen, you need your Passport and a pricey Visa to get in. They offer no entry waiver of any kind for "extranjero" DNI holders. Not for the costly visa, not even for discounts to Brazilian national parks (like Iguazu), something Mercosur citizens usually get. But I should note that there are some border tour agencies that claim to cross you over without the need for a Visa. Only problem is that is illegal, and if you get caught you will face a big fine and possible jail time.
Good for Chile on the DNI waiver. Argentine-DNI holders will also avoid this new reciprocity fee here upon entry. But in both cases, as a US citizen with an Argentine "extranjero" DNI, you still need your US passport to enter either country, or any Mercosur country for that matter. (at least through the main border crossings)
Cheers