Besides pretzels, lye is also used in processing hominy, Dutch chocolate, olives, lutefisk (a Nordic dish of fish that's been soaked in lye), Asian noodles, etc.... As a matter of fact, my local Asian market sells prepared lye solution for making noodles.
The true danger of lye stems from it causticity. In other words, it is not a toxic poison like cyanide and the like. It's just that its extremely high alkalinity at full strength has the ability to eat through things like your skin and other body parts. But when diluted down enough with water and/or when mixed with other things that chemically change it into a different substance, such as a sodium soap when mixed with oils, etc.., it's quite tame. For instance, when I bake my lye-soaked pretzel dough in the oven, it chemically changes into harmless calcium carbonate and makes my homemade pretzels taste distinctively like pretzels instead of plain baked, pretzel-shaped bread.
IrishLass
