The report is talking about people who inhale diacetyl in huge amounts. Eating it isn't a problem. Even inhaling "household" amounts isn't a problem. This is a "Black Lung" type disease.

If it *were* toxic in small amounts, you'd do better to avoid butter-flavored popcorn (you can smell the butter scent all over the house) and any home that brews their own beer (diacetyl is released and then broken down during the fermentation process ... although a practiced brewer wouldn't stop the process early enough to release it into the atmosphere. If their beer has overtones of butterscotch? Well then.).