FizzyZow, I posted a close up pic earlier in this post of a chick on the pellets (I use woody pet brand). The pellets are hard, but when they get wet, they break down to a saw dust consistancy. When you stir up the bedding, that should go toward the bottom, you can add a new layer of pellets if alot is broken down. My chicks had a blast dusting themselves today...they found some broken down pellets mixed with some of the finer ground food they flung out of the feeder and had a party!
Again, I have not used this in my coop yet (still finishing it), but don't see a reason yet not to. If you want to add some softness, you can spray the bedding down a little bit with water, but that kind of defeats the purpose of keeping everything super dry on the floor.
I thought I read that several people here use it in their coop, though.