It's the aromatic oils that are the problem. Small animals and rabbits kept on cedar shavings have died from liver disease. Cedar's toxic properties are why it's traditionally been used for keeping moths out of wool or fleas out of dog beds. Like pesticides that are toxic, the goal is to use enough to kill tiny bugs, without killing the larger species, like us or our animals.
If you seal cedar wood used for building with something like paint or polyurethane, it will contain the aromatic oils, so they aren't evaporating into the air. I'd do this on the interior of the coop, which is the only place I'd worry about fumes possibly concentrating. If you can't smell the cedar inside, I wouldn't worry too much about it.
Over time, cedar eventually quits off-gassing. That's why with cedar chests used to store wool, you occasionally have to lightly sand the wood's surface, to "renew" it.
