I'm not one to cover a cake in disco dust, I've never used it for anything but gumpaste decorations. Having said that --
I think any person who takes a big bite of disco dust deserves the rainbow poo that will follow. Most people don't eat the fondant or gumpaste anyway let alone when it's covered in sparkles.
My issue is with "professionals" who sell their cakes to an unsuspecting public. When people buy food from a business (whether it be home-based or a commercial storefront), they expect it to be fully edible. I know people do lots of nasty stuff in their home kitchens and feed it to their family...which also makes me sad, but it's the people who SELL food to the public and put inedible garbage on that food that really P!$$ me off.
Case in point: cupcakes. I've seen a million cupcakes doused with Disco Dust. There's no way to remove that before eating it. I see DD it in photos here applied directly on fondant and buttercream cakes, cookies, cupcakes, cake balls...edibles that aren't intended to be disassembled before consuming.
I'm not pointing fingers at anybody. I emulated someone quite famous from whom I took some classes in applying DD to cake some years ago. The point here is to bring awareness to the community at large and let people know that at least one health department has taken the issue to the FDA for clarification.