I just tried your mod, Kristin, and I definitely like it. I've been using the PTB (rolled, frayed) for quite a while and have been very pleased with it, but all the rolling, etc. is time-consuming. Your mod is much easier and so far it's worked well for me. Your pics helped immensely.
I haven't wanted to try the blue foam plug because I have to wonder what makes it BLUE!
I wondered about that at first, but I had a 55 gallon aquarium for over 20 years and the stuff you buy is tested SAFE for the fish. Filter materials won't have any chemical residue that can leach into the water. If it's safe for the fish, then it probably doesn't contain anything that would hurt you. You can kill your fish easily just by dropping a couple of pennies in the water. They will also die from just about anything that is coated with an unapproved chemical, including soap film. I wouldn't be worried about the blue foam.
Given that, if you burn it and inhale the products of combustion, all bets are off.