I've neve made a guitar, though I wouldn't mind trying, maybe just a body to start with, i don't know..... But I do do some wood work time to time. Cocobolo does indeed cause problems for many people, but not everyone. Wear a good dusk mask. Or go to an auto parts or auto body supply place, and for about 25 or 30 bucks you can get a disposable 3M respirator. These work great! serveral professional car painters I know use these. I like these, as i think they seal around the edges better than a traditional dust mask, and i think they're more comfy. Get a couple masks, & when you work with the cocobolo, have a friend hold a shop vac up to suck up the majority of the dust. Once you get a finish on the wood, it'll not cause problems for people anymore.
Mark