You can use any regular block (cobblestone, rock, grass, dirt, water, etc.). Just don't try questionable things. Really, the only command that will cause considerable harm if you enter a bad item type is /editfill, as that will go into an infinite loop.
I do plan to add support for configuring a list of usable blocks though, so you don't accidentally enter something you shouldn't one day because you're sleepy.
The problem is that all these mods make direct replacements of Minecraft's server files. Once you have too many of these mods, they will start stepping over each others' toes because they will be replacing the same files. Second, the Minecraft server code — while you can "convert" it to source code so you can edit it and put it back in — Notch obfuscated the code so someone has to figure out what all the functions do and update it for new versions. Therefore it's not very attractive to make standalone mods, for both creators and users. hey0's mod has plugin support and also provides a sensible interface for programmers, so it helps solve the two problems.
[*:il71s15b]Undo/redo up to 15 states
[*:il71s15b]Replacing only one type of block with another (see /editreplace)
[*:il71s15b]Primitive copying and pasting of an area
[*:il71s15b]A worldedit.properties file will be created on initial plugin load, letting you adjust the list of allowed block types (note: a server/plugin reload is required for changes to take effect)
Note that the copy/undo function is primitive at the moment — it only copies block type and not block data (such as the type of mob to spawn with a mob spawner). It is also not yet possible to rotate pasted regions.
You cannot currently save your clipboard to file or read from file. In the future I plan to add .schematic save/load support if I continue.