Hi Paul,
you can safely touch and handle this fungus and the smoke is as far as I know not more dangerous than woodsmoke. The smoke has a distinctive odour that I quite like. For firestarting you'll need a dry specimen (you know if it is dry enough if it feels light, not heavy). First try and light some with an open flame, if it's good it will start to smoulder for a long time and is not easy to put out. Then try the same with the sparks from a swedish firesteel. If it doesn't work try to scrape some of the fungus into a powder and direct the sparks onto that. I have also lit cramp balls with a magnifying glass and with a parabolic mirror (the shiny mirror out of a small torchlight) in bright sunlight. Cramp balls will also work in fire pistons, lighting it with a flint and steel is trickier.
Cheers,
Tom