Like anything , its all a matter of how much and how you use it (water is toxic if you consume enough of it). When lime is reccomended for use it is usually a hand sprinkle (wearing gloves) over the surface and then covered with turned over soil or with another substrate. Noone is suggesting that it should be laid an inch thick and the chooks walk directly through it. Done correctly, your chickens and yourself have less exposure to toxic lime then your average bricklayer does before smoko.
The CHOOKSHOP http://www.geckodan.com/the-chookshop/
Breeder of Exotic waterfowl, wild type Muscovy, Dutch bantams, Phoenix and Yokohama Fowls.