A bit of oxidation on white metal models isn't uncommon, after a while. Just take some fine steel wool to them and they'll be good as new. I do this as standard practice with metal models, even if they've been freshly removed from the blister. A degree of surface oxidation is inevitable and may not actually take much time or abuse to start forming - actually, I've yet to come across a metal model that looks as good out of the package as it does after a quick polish.
I wouldn't be terribly concerned about toxicity, either. Granted, there's no harm in taking reasonable precautions (disposable dust mask, safety glasses, gloves, etc.), but I wouldn't consider them a necessity, by any means. Generally, when doing things by hand, the risks are negligible if you avoid snorting, swallowing, and/or grinding the material into your eyes. If you sweep your workspace and wash your hands when you're done, you won't even have to contend with the worst of the common ailments associated with the task - a faint lingering metallic odor.