I've worked on many such projects and I've had a lot of fun trying to figure out how to pull off no-budget FX in the great MacGyver fashion.
However, I've also seen a lot of injuries happen on the sets of such films. Cameramen falling out of trees, actors twisting ankles while doing their own stunts, even food poisoning from the unrefrigerated fare on the craft services table.
I've also heard of a lot of pain and suffering from actors in regard to the makeup and FX while working on films. I'm not talking about legitimate accidents, but rather little things that could have been avoided if the people in charge would have taken just a little time for precaution.
The most obvious of the easily-preventable mishaps is also one I see over-looked the most often. I know that FX makeup artists often have a reputation for whipping together all kinds of strange concoctions and won't hesitate to torture an actor for the sake of art. However, like any good chef, it's very important to know your ingredients while cooking up the nasty stuff to douse actors with. This means being very familiar with the products you use for a makeup and how they react when in contact with all other elements (including human skin.)
One of the most common examples is the use of latex. Many people do not realise that it comes in a variety of types with different applications and that there are some that you really don't want to use directly on skin. While most retailers (like Wal-Mart and Spirit stores) will carry bottles of skin-safe liquid latex that are clearly marked for makeup applications, some of the professional places that I get my supplies from in bulk don't bother with the warning labels because they assume that you already know the difference between slush latex and old age stipple.
And let's not forget about how many people out there are allergic to latex no matter what form it comes in.
Allergies is another thing that I've noticed are often over-looked. Often an actor will ask "What's in that?" when you're about to drop a spoonful of blood in their mouth and let you know about any allergies to the ingredients. (Thus forcing you to whip up a suitable batch of blood on the spot and aggravating the waiting production crew on set in the process.)
However, many actors can't tell you if they are allergic to spirit gum or collodian, because they've either never had it applied to them before or they don't know what it is made of.
This is why testing for allergies prior to makeup applications is so important. If I'm working with an actor who doesn't know for sure how they are going to react to one of the supplies I plan to use on them, they get a small dab of it on the inside of their wrist. (I always keep a tube of hydrocortisone ointment in my kit!) Try to conduct your allergy tests as far in advance as possible, as once in a while you'll come across someone with ultra-sensitive skin and may have to re-think your entire approach to the makeup.
Now, I'm not perfect by any stretch of the imagination, and I learned the hard way never to take any type of makeup for granted when it comes to how an actor's skin might react to it.
While on the set for Psycho Chicks Anonymous, the script called for a woman who had dyed herself green to please her science fiction-loving boyfriend. I figured that the quickest way to give her a lovely green complexion was by painting her with water-based makeup. I didn't bother to test the makeup on her because it was the same kind used at amusement parks for face-painting kids, so I knew it was pretty darned safe for anyone.
But what I didn't take into account was how soft and supple the actress's skin was. The makeup when on without any problems, but when she went to wash it off with soap and warm water she discovered that her skin had actually absorbed the colored water in the makeup. Her skin had a noticeable light green tint to it for about two weeks, during which time she attended her school reunion. (And to make matters hilariously worse, her last name was Greene!)
Makeup application isn't the only place where actors can get hurt in FX work. I myself do a lot of weapon gags, and many productions can't afford the materials to do completely safe replica weapon fabrications, so I often have to create my builds using real knives and whatnot.
The first thing I do with any bladed weapon to be used as a prop is dull it down as much as possible using a grinding tool. Then I coat the edge with an epoxy or other plastic-type material to give it a smooth (and dull) edge although it still appears to be quite sharp to the audience.
My rule of thumb when it comes to building blunt force weapons is that if I wouldn't hit my mother with it, I won't bring it on the set to bludgeon an actor. With that rule in mind I've built rocks and bricks out of foam packing materials, tin cans out of cardboard and aluminum foil, and even tree spikes out of soft rubber.
It never fails to amaze me how often I see safety concerns go flying out the window on a guerrilla set because of time constraints or just over-enthusiasm to get the shots done and move forward. NEVER let anyone rush you when you're preparing for a potentially dangerous stunt or effect. I can't stress this enough. When you design an effect or plan out a stunt, you need to take everything into consideration from the actor's physical limits to what can happen if something goes wrong. The director will only be thinking about what he wants to see, the DP will only be thinking about how he's going to shoot it, and everyone else will be focusing on their own parts to play on set. It will ultimately be your job to make sure that the effect is done as safely as possible and no harm comes to the actor. Make them listen to you if you have any concerns whatsoever about what they want to do!
Believe it or not, I have listened with horror as a director told me that he planned to do a car-hitting-pedestrian effect by having a car run into his actor at 20 miles per hour and then speed it up in post. I told him that it was extremely dangerous and that there were many safer and saner options to achieve the effect he wanted. However, he was convinced that 20 mph was "not that fast and wouldn't hurt the actor." Had I been given those orders, I would have told the director where to stick his car and escorted the actor off the set before he/she got seriously injured (or worse) for the sake of a shot. (I did contact someone I knew who was on crew for that production and voiced my concerns for the safety of the cast.)
While I could go on for days about taking preventative measures for FX makeups and gags, it really all just boils down to using common sense and planning ahead. Check for allergies, know your materials, keep a well-stocked first aid kit with your gear, make sure you always have access to water (even if it's just kept in bottles), and a cell phone to call for help in case of emergency. If stuntwork is involved, do your research on how to safely execute them and consult an experienced stunt coordinator if you have any questions.
You want your work to be memorable for the artistry put into it, not for the scars!