Lime mortar for indoor applications
Sure, no problem, and if the wall is built using lime (most over 100 years old or so are) then you should use lime mortar and never cement (cement mortar is too hard and unforgiving of the normal movement in an old house).
The only health risk is the same as with using cement, i.e. don't breath in the powdered product and avoid skin contact. Use a mask when mixing the mortar and gloves to protect your skin.
Don't mix the mortar too sloppy, a stiff-ish mix is easier to re-point with. Always damp down the raked out joints with a garden sprayer and let it soak in a few minutes before pressing the mortar in (stops it drying out too quickly). Keep the finished re-pointing damp for a few days (draping a wet sheet over works okay inside, or mist spray it with a garden sprayer).
Using a sharp/washed/grit sand gives more authentic results than using a fine building sand. I sieve my local sharp sand to remove the biggest particles/stones, then I find it perfect for lime mortar work (you want about 3mm down to sand).
Use a finger trowel to put the mortar into the joints, (I make mine in various widths by cutting down cheap pointing trowels) it's cleaner and easier than using a regular, large pointing trowel.
Enjoy! Working with lime mortar is slower (and easier!) than cement mortars and gives a lovely finish.