i'm starting to make some wood toys again, and i'm not sure what i'll be using on them. everything i've made before hasn't been for a baby.
i've made milk paint before, it's pretty simple(and cheap!) to do with some dry milk and lime. you can find instructions online, or you can buy some pre made.
i've been researching some different finishes. you can buy a lot of completely natural finishes to put on wood, most of them are food safe, so i'm assuming safe for chewing?
i think i'm going to do a beeswax/mineral oil finish. you just melt a little beeswax in a pot of mineral oil(have to look up the exact proportions, maybe like 30/70?) then let it cool, apply it with a rag and rub.
if your neighbor is using raw wood, that should be fine to use. from what i know about milling(my dad had a mill for a while), all they use is a saw/blade and water for the cuts. i'm sure you could ask him if he does anything different.
i don't know if any kind of wood would be bad for teething? hmm...