Thank you mypicklebird for the suggestion to look up the MSDS sheets. I have been wondering about this for quite some time Your insight has been very helpful.
I finally found something about how Food Grade and non-food grade are different. The issue for both in this discussion is inhalation.
As near as I can tell, in this discussion, they refer to FOOD GRADE as AMORPHOUS & NATURAL and/or NON-FLUX-CALCINED. While the non-food grade is referred to CALCINED.
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From:
http://digitalfire.com/4sight/hazards/ceramic_hazard_diatomaceous_earth_351.html
Amorphous silica, natural diatomaceous earth, is usually considered to be of low toxicity; however, pure amorphous silica is rarely found. Depending on the source, it may contain a low percentage of contaminating quartz, rarely over 2%; characteristically, natural diatomite contains no measurable cristobalite.
Processing of amorphous silica by high-temperature calcining, with or without the concomitant use of fluxing agents, alters the silica from the benign amorphous to the pathogenic form (cristobalite), which causes lung fibrosis.
Non-flux-calcined diatomite may contain from 20% to 30% cristobalite, flux-calcined diatomite may contain as much as 60% cristobalite.
Calcined diatomite can produce a severe and disabling pneumoconiose, which is attributed to its cristobalite content. Altough a form of silicosis, it characteristically produces pathologic and radiographic changes, which are different from classical quartz silicosis. Diffuse rather than nodular changes are more common.
There is no evidence to associate any form of diatomaceous earth with human cancer.
The IARC concluded that evidence is inadequate to describe amorphous silica as carcinogenic in either experimental animals or humans. The IARC concluded that crystalline silica is a probable human carcinogen.