as a gas it can irritate the lungs, its true. but dissolved in water it is nothing but the most potent life affirming substance on earth as far as i am concerned. i drink a big glass of ozonated water every morning and feel great! it wakes me up and energizes me on a cellular level like nothing else ever has, and i mean nothing.
you can also do direct insufflation if you get the high grade medical units. these use a feed from an oxygen tank, so the ozone it generates is pure.
the problem with the gas it that it often combines with nitrogen to form nitric acid which is toxic. but if you insufflate the pure ozone this won't happen. also its not a problem when dissolved in water. the link trapper gave you is good. here is a wonderful layout of the entire issue written by dr. saul pressman, north america's leading expert on ozone treatment.