Wikipedia claims that it has been said that bay leaves are poisonious, but never proven. Isn’t this common knownledge? I’ve used bay leaves before in my soup and in my beans, and I’ve never died…
This is merely a WAG based on rumors/hearsay, but bay leaves, being very thick, are easy to choke on, especially if they’re hidden in the midst of a soup. Thus, I’ve heard it theorized that the prohibition against bay leaves is really against choking, but was either misunderstood or purposely emphasized as poison–which would make you hesitate more, something that’ll poison you or something that’ll choke you?
But again, there’s actually no factual content to this post whatsoever, merely stuff culled together from things I’ve heard, so take it with a grain of salt. Or some bay leaves. Whatever trips your trigger. 
Part of the problem is probably that Bay Laurel shares its common name with unrelated poisonous-leaved laurels.
Here’s a cite, originally provided by Bippy the Beardless in a thread I started about Bay leaves.
It says the leaves themselves have been said to be poisonous, not that whatever comes out of them in cooking is poisonous. I’ve certainly always removed them before serving, but more for aesthetic reasons than safety.
I didn’t know this as a kid and used to chew and swallow bay leaves. This was 15 years ago, I’m still alive and kicking. Did I get lucky?
One of my food/plant books (perhaps I’ll see if I can find the reference later) claims that the whole leaves were safe when added to a dish and removed before eating, but that powdered bay leaves are/were banned from sale in the UK because they caused male infertility. I have been unable to find any solid evidence supporting this claim, and indeed it seems as though it is simply false or based on some kind of misunderstanding, so I mention it only to corroborate the fact that such a claim has been made.
I never heard they were poisonous, per se, but most guides tell you to remove them since a large bay leaf can cut up the digestive tract as it passes through.
I’ve never seen powdered bay leaf in the US, but there is a version in which the leaves are chopped finely (about 3-5 mm square). These are probably too small to cause damage.
I get powdered bay all teh time from Penzey’s - penzeys.com
Powdered bay leaf is (not surprisingly) an ingredient in Old Bay seasoning, which in my experience has never proved lethal. It makes for a real tasty potato salad, though.
Indeed, there are many spice mixes which relies on powdering bay leaves at home using a spice grinder.
Everyone should have a spice grinder. It is a very handy way of adding Bay to a recipe without having to subsequently fish out the spent leaf.
Although, mom always put whole leaves into things and instructed us to make sure we didn’t eat them, lest we keel over from poisoning. I kinda like passing on that tradition.
I don’t see anything particularly toxic in the leaves:
There are some reports of skin sensitivity to the oil, and excitability caused by eating too many bay fruits, but nothing concrete implicating the leaves.
Many spices and herbs will do bad things to you if you overindulge, but so will green apples, rhubarb, and beans.