Yes, there are some real bad chemicals used in pressure treated wood. Whenever I cut it with a power saw, I wear a mask! It's the recommended procedure especially if you're doing a lot of sawing with a power saw. As that stuff gets heated up, it becomes airborne. That's when it's dangerous to everyone, you, kids, and pets.
You didn't mention the probable cause of the splintering and cracking. If it's from the powerwasher, then you need to scale back on the pressure. Otherwise, you'll be at this for the rest of your life. With that said, I suggest you replace the bad boards and screw in new ones. However, from the 'tone' of your post, I've got the feeling that we're talking about a lot of boards. I'm not sure how much sanding you'd have to do w/o seeing the wood but my bet is spend as much time doing that as you would in simply replacing the boards. Besides, unless you sand the entire deck, you'll have unevenness in board height between the sanded ones and the non-sanded ones. And if you do end up sanding the entire deck, are you planning on using one of those hardwood flooring sanders? Remember, you've probably got nails/screws that need to, first, be 'pushed/nailed' in a bit. If you don't, you're going to go through a lot of sandpaper that's gotten chewed up from hitting the nails. See what I mean? Is this approach worth it?
In short, my suggestion is to replace all the bad boards no matter how many, and scale back on the pressure when you powerwash. My best to ya and hope this helps.