I agree with SavoryKitchen it is more about the paper catching fire.

Yeah, I think it's perfectly fine too.

I think that Savorykitchen is right. I looked around for health-effects information on parchment papers, and while I wouldn't make a habit of roasting them at 500 degrees, my concerns would be more for fire than for the off-gassing of toxic compounds.

I think the bread is fine. The oven safety is probably there to tell you not to put parchment into a 500 degree oven b/c it would smoke and char excessively. Baking in a covered pot probably kept the paper from getting too burned.

I've used parchment at very high temps myself and have never had any concern about safety of the food item. I have set off smoke detectors though!