I think it's only toxic when indoors where there's little airflow, and mostly for baby chicks. I don't think you have a single worry with outdoor cedar chips in the play yard. There's plenty of ventilation in the backyard 
I tell you, you guys have no idea how much learning this reduced the stress of my chicken free-ranging. I was wondering if I was going to need to pull it all out if they continued going in it. My pullets will be happy to wander through there - hopefully they'll be smart enough to fly if a swing with a small child on it comes their way though. 
Hatched April 12, 2012 - Drama, a Light Brahma; Caunnie, an Easter Egger; and Rhodie, a Rhode Island Red
Hatched October 14, 2012 - Latte, a mixed pullet - a.k.a. a "Fudgelet"
Hatched December 9, 2012 - Snow and Blackie, Olive Egger pullets and Penny, a Black Copper Marans
Hatched April 12, 2012 - Drama, a Light Brahma; Caunnie, an Easter Egger; and Rhodie, a Rhode Island Red
Hatched October 14, 2012 - Latte, a mixed pullet - a.k.a. a "Fudgelet"
Hatched December 9, 2012 - Snow and Blackie, Olive Egger pullets and Penny, a Black Copper Marans
