When is it dangerous even if it's not craft paint? When it's not FDA-compliant or used improperly!
There's a good article in Monday's USA Today, that you can read here. It explains the allergic reactions - red rashes, etc. - that can result from using craft paint or face paint that's not the good stuff.
Face paint, after all, is not all created equal. That stuff you get at most Halloween stores is usually from China. Remember all those issues we had a while back with products from China? The pet food? The paint used on children's toys? Yeah, same country, similar issues.
The products I use are all labeled as makeup, not paint. So that's a start. If you're looking for face paints, look for makeup. Something to note: Face paint (as other cosmetics) are not FDA-approved. Under the law, the FDA does not approve cosmetics. What they approve is the pigments used in the cosmetics. This makes the makeup FDA-compliant, if one is being accurate. If someone tells you that the face paint he or she is using is FDA-approved, s/he's wrong.
Now, I'm going to assume that anyone reading this is bright enough to never, never, never use craft paint on his face or the face of his child. That means no acrylics, no temperas, no watercolors, no markers, no Sharpies. Non-toxic doesn't cut it. As a good friend of mine in Minnesota likes to say, habanero peppers are non-toxic, but you wouldn't want to rub them all over your face!
So... what about those Halloween kits you see at the stores this time of year?
They're... potentially OK. But pay attention.
If you buy a great-looking kit to do your son up as Darth Maul, and there's an awesome photo of just such a face on the packaging - read the entire package before you buy. If the label or packaging says to avoid the eye area with certain colors (like red or black, which is very common), listen to the packaging, no matter what the photo shows. The packaging and labeling trump the photography every time. Take it seriously.
If the makeup smells funny, ditch it. Do not try to use it, since it could be infected with bacteria or simply old and past its shelf life.
Your best bet? Hire a professional. Even if it's not me (there, now you know I'm not biased). Ask him or her what's being used. If you hear Snazaroo, Grimas, Paradise, Mehron, Fantasy WorldWide, or several other brands (do your research if you hear something unfamiliar), you're OK. If it's craft products, run. Run like the wind. Run like they're trying to give you the Swine Flu.
And the same goes for face painters who won't tell you what they use. If they won't tell you, it's because they have something to hide.