I think we can finally lay this to rest.  Permanently.
 
Cedar (ie: western red), and particularly aromatic cedar (aka juniper)
is a skin irritant, lung irritant, and a proven carcinogen in long term
exposures with people.  As in, cedar sawdust with woodworkers who don't
use dust masks.  While short term exposures will probably not lead to
long term damage, anyone who's inhaled cedar dust (like me) will attest
it *hurts* for several days.  Cedar oil is essentially a preservative.
It kills fungi and other rotting organisms - which is part of the reason
for its popularity as litter - it kills some of the breakdown bacteria
that cause the smells.  Is it any wonder it can do damage to bigger creatures?
 
There is an article in Better Homes and Gardens WOOD in the last year
that discusses cedar under the subject of "Toxic woods".  Cedar is
classified as the most toxic of the common domestic lumber species, and
the risk of exposure is listed as just below "high".  The only other
domestic woods listed that are worse than cedar are Oleander and Mimosa.
 
I will try to find the exact reference.  I imagine that OSHA will also
have "material safety" sheets on it too.
 
The smelly cedar chips you encounter are most often juniper, because
ordinary cedar doesn't smell that strong.  If you want to test the
toxicity yourself, go out and find an ornamental juniper in a garden
nearby.  Rub the foliage on some tender skin.  Say, the inside of your
wrist.  You will get a rash, and it'll sting like crazy for several days.
 
[Posted in FML issue 0665]