Bamboo batting is a form of rayon. The topic is complex because there are different methods of producing rayon.
Cuprammonium rayon is no longer permitted to be produced in the U.S. because of the very toxic chemicals used in the production process; however, this method of production is still allowed and used in developing countries including China. I was unable to determine online whether this production method is actually used to produce bamboo batting. If it is the cheapest method to produce the batting and the batting is produced in a third world country, then the probability rises that this method is being used.
Even if the cuprammonium process is not used in the production of batting made from bamboo, the process for producing rayon from bamboo involves the use of not only lye (sodium hydroxide), but also bleach, carbon disulfide, and sulfuric acid. Exposure to even small amounts of carbon disulfide can be hazardous to workers and cause neurological damage. Amounts of chemicals used are not the only important factor; toxicity of the chemicals used is also extremely important to take into consideration.
For those who are interested, the following websites offer additional information:
http://www.seamstobeyouandme.com/2010/01/18/bamboo-batting/
http://awakenedaesthetic.com/2010/01/how-green-is-your-bamboo/
http://en.wikipedia.org/wiki/Rayon#Production_method
It is the soft fibers produced from bamboo that require the most toxic processing -- e.g., fabric and batting. Bamboo flooring is hard and does not require the toxic processing. Of course, the soft fibers can also be produced by mechanical means; however, manufacturers must find this method of production much more expensive since it is much less common than chemical processing.