So, seems to be a lot of mis-conceptions here.
The powder is cornstarch with food coloring. Unless you have a food coloring allergy, respiratory issues or are allergic to corn there isn't much to worry about. I have shot 3-4 of these for my local paper and two for the company that runs them and feel just fine afterwards. A painters mask reduces the amount you inhale by quite a large margin. If you want to filter it all out you will need a good respirator.
There is little to no risk to your camera and lens as long as you play it smart. Camera covers work great and this is the one time I do use a UV filter. 1Dx + ttp Hydrophobia (I am working on modding the front end with a 77mm filter so it screws on and seals even better) +70-200 and 77mm Filter, never seen ANY dust on or in the lens. For my 24-70 I use a similar setup and a 2nd body, again filters go a long way. I have seen other photographers use underwater covers and they work well, just blow them off (DO NOT use water) with an air compressor and you will be fine. Water makes a huge mess out of the stuff.
They are fun events, and the photos always turn out very very good. Just be smart, think about what you are doing and your gear will be fine. I worry more about shooting kayaking or skiing then a color event~