Hi
I was just surfing around. I have been French Polishing for 16 years, my Grand and Great Grandfathers were polishers.
Waterbourne finishes usually contain little organic solvents and some are made from around 80% arable crops so are very environmentally friendly and safe in application.
The chemical composition of the cured finish however may not necessarily be safe for use on childrens toys as the finish will contain polymerising agents, some of which are harmful.
Look for the relevant British Standard, there is one for safe finishes. Probably the easiest finish to apply and the one I know for sure is British Standard rated for food safetly is OS Oil finish. Pure Shellac finishes are also safe (shellac's main use is to coat fruit and vegtables to make them look more attractive (chocolates and smarties too) and to coat pills for ease of swallowing. You better check that British Standard Institution and other relevant bodies approve of this.
All finishes are not harmful unless ingested. When going for a high build (thick) finish a horrible acid catalysed melamine finish which will knock you out unless you wear goggles and a respirator when you apply it may be the most safe when fully cured as it is so durable it is the least likely to flake off.
Most of the bespoke furniture and toy makers I know use oil finishes as they are safe and easy to apply, they are also very cheap as a little goes a long way.
Hope this helps
Toby Newell