There is a great deal of 'urban legend' type tribal knowledge about the dangers of working with Mother of Pearl.  Most of it is false.  The incidence of allergic reactions is almost zero, and the dust IS NOT poisonous.  HOWEVER, breathing the dust is VERY unhealthy, and can lead to serious consequences, particularly silicosis of the lungs.  The simple solution is to NOT breathe the dust.  Whenever I work with pearl, I always wear a toxic dust mask while sanding dry.  If I am preparing block markers for inlay or shaping a nut, I use a wet lap.  This is a VERY FLAT piece of hard material that has had a piece of 80 to 120 grit wet-and-dry sandpaper glued to it.  The dark grey silicon carbide paper that hardware stores sell works well glued to glass.  I use the special gold 3M adhesive-backed paper Stewart-MacDonalds Luthier supply sells on a piece of 1/2" by 9" by 12" Avonite (Corian) I bought on eBay.  The gold sandpaper is self-adhesive.  You can glue the other sandpaper with 3M spray adhesive.  BE VERY CAREFUL with that adhesive, it is as explosive as nitrocellulose lacquer.  Work the pearl wet to shape, and flush the sludge down the drain.  Don't let it dry on the plate, since it will just turn to dust when it dries!