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This is the first time I see someone post about using wood chips in runs. I just started using it this past Summer, and I find it works great. Like you said, it stays dry and doesn't smell. And they love to scratch around in it. Now the mulch in my flower beds, they scratch up and make a mess of it, but in the runs, it's contained, so they don't make too much of a mess. I also use pine shavings in my coops.
Cedar shavings, I stay away from. I don't know if it's bad as everyone says or not. I've never researched it, I just don't use it. I have old cedar fence boards that I use around the coop, on the outsides mostly,and don't have any problems there, but I've never used cedar shavings or chips.
Paula